" /> Telco 2.0: August 2016 Archives

« July 2016 | Main | September 2016 »

August 30, 2016

Apple, Regs, 5G, FTTH, Content, Cloud: Telco 2.0 News Review

Apple’s €13bn tax bill; HomeKit as standard; “$1m Dissident” iPhone defies UAE; China ASPs; iRules

The EU inquiry into Apple’s tax affairs is in, and it’s pretty stern news for Apple; the EU wants it to repay €13bn in back tax.

Even though this is coming out of the pool of Apple profits held offshore that it can’t distribute for US tax reasons, and it has more than enough cash to pay the bill, expect all sorts of trouble. To begin with, here’s the Irish finance minister trying desperately to turn down the €13bn in raw cash - the problem is that the EU ruling isn’t so much about Apple’s behaviour as it is about the Irish tax code they have been exploiting, which it considers to be illegal state aid to business. And the US Department of the Treasury is hopping mad. (Also, if the TTIP was looking shaky earlier on, it’s surely done for now.)

But it’s good being Apple. Major US construction companies have started installing HomeKit-compatible controls into every new house they build. So the buildings will, in a sense, be giant adverts for the iPhone.

The ubiquity of Apple’s products also makes them a target. The UAE’s secret police made no fewer than three concerted attempts to hack this dissident over 5 years, without success. But their latest attack, using SMS spear-phishing, went badly wrong. Not only did he become suspicious of the dodgy SMS, he passed it on to volunteer hackers who identified the attack server…in Israel. Oops. Also, they documented the three new zero-day exploits against WebKit the attack targeted, and now Apple has patched them.

Here’s an interesting look into Xiaomi’s terrible year so far, making the point that smartphone ASPs are rising remorselessly in China. So far that’s hit Xiaomi and buoyed Huawei up, but they’re heading for levels at which Apple might get a tailwind, especially if the SE gets a refresh when the iPhone 7 lands. On the other hand, here’s a glowing review of the Samsung Note 7.

IDC reckons we might be seeing a long overdue upgrade cycle in European PCs, at least in the ultrabook/detachable segment. No.1 in detachables is of course the iPad Pro, and No.1 in ultra-slim notebooks is of course the MacBook Air.

AMD is taking GPU market share off Intel and NVIDIA again, although the wider market is still shrinking.

Here’s Hyper, an app that aims to recreate something like Apple’s iconic HyperCard from the 1990s.

And is Apple’s policy of letting apps run their own payments for anything except media downloads (i.e. iTunes competitors) anti-competitive?

Facebook wants to slurp WhatsApp phone nos; e-privacy regs battle; 5.9GHz row; Cicconi steps down

So, remember when WhatsApp founder Jan Koum said he wanted to know as little about his customers as possible? Now WhatsApp is part of Facebook, and Facebook would very much like to link the phone numbers WhatsApp uses as anchor identifiers with Facebook profiles. This recaps a privacy row from years back when Facebook started matching phone numbers from user A with user B, even if user A didn’t explicitly share them with, say, user C. The UK Information Commissioner wants to “monitor it” and it’s a good bet they won’t be the last. Note: you can opt out via the settings menu.

Meanwhile, Facebook has laid off the team of editors who picked the “trending” stories, and that went as well as you might have expected.

Not surprisingly, Facebook and Vodafone are on opposite sides of the European Union’s planned e-privacy directive. Vodafone thinks OTTs should be regulated like telcos; Facebook doesn’t. That said, in the light of the project to hoover up WhatsApp phone numbers, it’s somewhat ironic that Facebook is specifically complaining about providing a phone directory.

Another example would be the requirement to provide automatic call forwarding and directories of subscribers, which “hardly fit the services provided by online service providers”, said Facebook.

The European Commission also this week took another whack at the old why-won’t-Google-News-pay-for-links chestnut. The EFF isn’t keen.

Over at the FCC, the advertised row about the 5.9GHz spectrum assigned for either WiFi or car-to-car systems is bubbling up as a team of consumer lobbies hand in their protest.

The 600MHz incentive auction ticks on. The take is now up to $18.5bn, having risen $8.5bn in a week. This means that the auction has now hit one of three milestones needed for it to actually hand out spectrum. Next week, the minimum ante goes up from 5% to 10%, which may kick off a surge of bidding. So far, spectrum over Los Angeles is most in demand - five out of 62 bidders are chasing the same block.

India’s so-called mega auction has been put back by two days to make sure that it clashes with a religious festival. Yes, to make sure it clashes - it’s considered lucky, apparently.

Sprint got caught sticking to rebates it was told to pay out, and has to fork out with interest.

And AT&T’s chief lobbyist Jim Cicconi is taking his carriage clock and hat. Harold Feld, ironically, has a gracious appreciation.

VZ “ready to launch 5G before the standard”; Google 3.5GHz alliance; Vodafone-Idea denied

The one thing everyone wants more spectrum for is 5G. It’s getting more obvious with every passing day that Verizon is determined to be the first 5G carrier in the field - this week, VZ announced the second wave of specifications from its own 5G development effort, covering authentication and protocol design, and suggested that it would be willing to deploy a pre-standard system on its own hook.

It also said that the job is between 75 and 80 per cent done, at least as far as fixed-wireless goes, that its own spec should be complete this year, and that the vendor partners have enough detail to start work on products. Not surprisingly, it’s hoping that 3GPP will just ratify the results once the new radio is working.

In the meantime, it deployed LTE-A this week across the footprint, using 2xCA to double the uplink bandwidth. This is an important step, as it expects to use LTE-A as the anchor for early 5G, with the new radio slotting in as another aggregated carrier. Sprint and Samsung, meanwhile, say they’ve deployed 3xCA to 500 cells around Chicago. The next step will no doubt be one of the US carriers managing to squeeze a gigabit; here’s Elisa and Huawei claiming 1.9Gbps.

Vodafone-Hutchison Australia is sticking to the official 5G timeline of no movement before 2020, but they are going to do some demos and trials later this year.

MIT has demonstrated a new technology for coordinating distributed MIMO arrays, MegaMIMO 2.0. This is in the context of WiFi, but it’s obviously also relevant to 5G.

Part of the early-5G alliance - Intel, Nokia, and Qualcomm - have formed a new alliance to develop solutions for the 3.5GHz shared band the FCC just created, the so-called Citizens’ Broadband Radio Service. Interestingly, the other members are Google and Ruckus Wireless. Even more interestingly, the proposed technology is specifically “LTE-based” - a surprise from WiFi specialists at Ruckus.

CableLabs says it will have as many as 9 partners in the CableWiFi roaming network by next year. SigFox is deploying in Colombia.

Idea Cellular denies roundly that it might be selling out to Vodafone India. Orange denies it’s going to take a piece of Telecom Italia off Vivendi. Axiata has mixed Q2s. EE puts its out-of-bundle roaming charges up. FreedomPop snags a $50m investment from Alfa Group’s Mikhail Fridman.

Big changes at Google Fiber; cable won US Q2; UK broadband numbers

What’s up at Google Fiber? We know there’s been a surge of interest at Google in 5G wireless - note the 3.5GHz story above - and interestingly, a decline of interest in robot space balloons and the like. We also know that the Fiber business unit has been “challenged” to reduce its costs by 90%. Does this mean they’re flipping to wireless? Giving up? Or does it mean they’re increasingly keen on sharing dark fibre with other deployers?

Another view would be that they’ve decided that national gigabit connectivity is coming, and it’s coming from cable first of all. This roundup of Q2 data suggests that the cablecos are winning and the only way for the telcos is to roll out either fibre, or something equivalent.

That said, in Australia where once NBN Co dreamed of building fibre to basically everybody, they’re even cutting back the numbers of people who will get gigabit cable, in favour of VDSL. It turns out competition is worth having.

In the UK, there’s finally some momentum behind FTTH roll-out. We’re now up to 780k passed, and growth is accelerating. CityFibre is planning to overbuild Hull’s unique incumbent KCOM. That said, BT is arguing that it should either be exempt from the planned broadband universal service obligation, or perhaps the USO shouldn’t include use cases like using more than one device in one house.

Meanwhile, the opposition has come right out and promised to build national FTTH.

Olympics TV dives; BBC data; Comcast-Dreamworks; the digital stadium; Spotify rights

Here’s a very interesting data point - while Comcast’s broadband operation was triumphing, its joint Comcast-NBC TV coverage of the Olympics was doing poorly indeed. Viewership was down 15% compared to the London Games, and they ended up giving away ads during the closing ceremony to fill in space. Streaming - you guessed it - almost doubled.

The BBC, meanwhile, reports that just under half of the 29 million unique users it observed during the Games came from a mobile device. UK-only traffic doubled compared to the London experience.

Comcast, meanwhile, closed its acquisition of Dreamworks, which gives outgoing CEO Jeffrey Katzenberg a $391m payday.

Here’s an interesting piece on how American football has digitised the stadium. Important point: it’s all WiFi. No telcos.

Spotify’s contracts with the big three record labels have all come up for review without reaching agreement, so its rights continue on a month-by-month basis. The labels think Spotify is pricing itself low. Spotify hopes it’s big enough that they can’t afford to just pull the plug (and of course that would look deeply cartel-ish), they know Spotify can’t walk away. Expect the negotiations to drag.

Is TV advertising still managing to defend share against online, or is that just an Olympics bump?

And Google may be about to shoot those annoying interstitial ads in the head.

Rackspace goes private, pivots; VMWare new strategy; how telcos failed in cloud; IDC IT spending data

Rackspace has gone private, as Apollo Global pays $4.3bn for the company. Dealbook points out that this is a bet on its new strategy of being a top-tier integration partner for all the major clouds, a big change from the days when it helped to invent the cloud. That said, its founder status in OpenStack probably helps.

VMWare is doing something similar - it is reorganising its various products as a single stack, offered as a service (infrastructure-as-a-service software, as a service!) and very often running in a big four public cloud. A bit more here.

How did telcos fall so far behind the big four? Perhaps because they failed to realise how quickly the big four were improving their security.

IDC reckons total IT spending will grow 3.3% annually over the next five years, with the growth concentrated in banking, manufacturing, and healthcare, and in medium-sized companies among those sectors.

81% of telcos expect to have some NFV deployed by the end of next year. The typical use case is business CPE.

Scepticism about Cisco’s prospects in SD-WAN. AT&T takes charge of OPNFV’s end-user advisory group. Will IoT be the key driver for micro-data centres?

Why failover doesn’t work. Tropo has an app store, Tropo Solutions. GE, the software company. And 25 years of Linux.

Here’s the world’s biggest Blue Screen of Death, 50 feet tall.

To share this article easily, please click:

August 25, 2016

Seven Tough CEO Questions - Telco 2.0 Update

We’ve published a new research paper: Seven Tough CEO Questions - Telco 2.0 Update. We’ve identified seven questions that are fundamental to telcos’ forward success, and compiled some of our recent research that helps address them.

This report is part of the Executive Briefing Service and you can read an excerpt of the report here.

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

Thumbnail image for tough-questions.jpg

To share this article easily, please click:

August 22, 2016

Cisco, AT&T, DTAG, 5G, Intel, ARM: Telco 2.0 News Review

Cisco pivots to SDN, slashes jobs; AT&T claims big CAPEX savings; OpenFlow controllers, rated! DTAG strategy, Q2s

Cisco is urgently shifting its focus from big-iron routers to virtualised networking. This is a historic decision for the company more associated than any other with the very concept of an Internet router. According to CEO Chuck Robbins, this is because major customers are demanding it, notably AT&T. This comes after a mixed Q2 - overall revenue was up 2%, not least because of a strong performance from security products, but this masked a multitude of sins, as NGN routers were down 6% due to much lower spending from service providers. As a result, the company is laying off 5,500 employees, 7% of the workforce.

AT&T’s CTO, André Fuetsch, says their CAPEX “is not going up, it’s certainly coming down”, and that they’re already seeing significant cost savings from SDN/NFV deployment.

“If you look at the efficiency of the capacity we put into the network, just in 2015, 2016, we’ve actually put in 2.5x the capacity at 75 percent of the cost of what we paid back in ‘13 and ‘14. So you already seen the economics, the efficiencies coming in from these new technologies,” he said. “Going forward, we will continue to see the cost-per-megabyte transported to continue to drop. And we’re in the business of connectivity, and that’s what it’s really all about.”


Fuetsch further said that they might maintain the current CAPEX/revenue ration and use the spare money to make more investments in the network, giving little suggestion that it might be paid out in the dividend. The strategic importance of all this can be gauged from Fuetsch’s rise - having been the SVP responsible for the NFV strategy, he’s now the company-wide CTO and the president of Shannon Labs. John Donovan, meanwhile, has been retitled CSO and President of Technology and Operations, which may mean he’s going to be the next CEO.

Here’s a valuable corrective to all the virtual network rah-rah - Australian researchers benchmarked the major OpenFlow controller implementations on a variety of hardware and OS platforms and found most of them seriously weak. On a Tilera networking device, the best-performing controller couldn’t handle more than 17% of line rate. This went up to 68% for the combination of the Beacon controller (supported by Intel via the Floodlight project) and an Intel Xeon server - as the other controllers did poorly on the x86 machine, this suggests Intel knows something about packet processing in x86 they don’t, and that it optimised Beacon for x86.

No surprise, then, to find Intel working with AT&T to optimise packet processing in virtual networks on x86. Perhaps a bigger surprise was that the Cisco-championed OpenDaylight controller performed so poorly the researchers didn’t bother experimenting with it any further.

Intel also recently announced its first silicon photonics products, network cards for very fast (100 and 400Gbps) data-centre switching.

Deutsche Telekom has announced a new “pan-European strategy”, which turns out to mean creating three big data centres to concentrate its whole product line in virtualised form, and paralleling them with engineering and customer service offices in “production centres”. These will be in Hungary, Poland, and Greece, with the first one coming on line at the end of the year.

Very impressive, but you do wonder about this. Apparently they’re having a “close look at the corporate culture” to encourage ethical behaviour. Is there something they want to news-manage? Meanwhile, the company posted Q2 numbers - revenue was up 2.2%, EBITDA up 3.6%, but net profits down 12.8%. As usual these days, the growth was all coming from T-Mobile USA.

DTAG-SKT-VZ partnership: a sign of early 5G? US wireless >50% IPv6; small cells flop

More of those 5G partnerships are being announced. This one, between DTAG and SK Telecom, is interesting - CTO Bruno Jacobfeuerborn says that:

From our point of view, the next release of the official 3GPP specifications are set to form the basis of 5G

The next release, as it stands, is 3GPP R14, coming next year. Does that mean DTAG and SKT are joining Verizon on the early-5G bandwagon? Quite possibly, as SKT also signed a further partnership with Verizon itself, in parallel with their existing cooperation on 5G trials specs.

This statement from AT&T, meanwhile, has been read as a rebuke to VZ and friends for pushing ahead of the standards process. However, note that DTAG and SKT are explicitly listed in it as carriers co-operating with AT&T on 5G. Also, our previous link mentions that SKT and VZ will be cooperating on, among other things, the mobile variant of the Central Office Re-architected as a Data centre (M-CORD).

CORD is AT&T’s very own special contribution to network virtualisation, so you could make a case that there’s actually more cooperation than conflict in this message. Perhaps this line:

Linking trials to the standards process is the fastest path to large-scale global 5G deployment


actually means “get some agile development going, like we did with OpenMANO”? Interesting. Meanwhile, BT is getting in on the act with Nokia, now it’s a mobile operator again.

BT’s also announced that it will be providing its retail customers with IPv6 connectivity this autumn. Originally, it planned to reach 50% by April, but obviously that didn’t happen. Apparently you can expect a /56 prefix, dynamically assigned for some reason.

It’s been a big week for the global effort to fix the Internet addressing shortage - on the 17th, for the first time, Facebook observed more US mobile traffic from IPv6 networks than IPv4, while the World IPv6 Launch campaign confirmed that US mobile is now at 55% IPv6 penetration.

USA-Mobile-201608-1024x804.pngThis is really interesting - MoffettNathanson reckons there are as few as 30,000 small cells in the USA. For context, T-Mobile USA is reckoned to have around 60,000 macro-cells, and AT&T’s 2012 Project Velocity foresaw 10,000 additional macro-cells and 40,000 small cells. We know AT&T deployed at most 20,000 of the planned 40,000, and may even have withdrawn some of those in favour of more capacity on macro sites after Leap’s spectrum became available. Sprint was fascinated with small cells for years, too. This suggests that small cells have seriously under-delivered in the United States - one of our conclusions in this research note.

Meanwhile, after Hans Vestberg’s sudden exit and a Q2 dominated by concerns about Ericsson’s accounting practices, the two huge family trusts that own the company and most of Swedish industry are after the chairman’s head too. The arch-rivals at Nokia have, meanwhile, bagged 30% of a huge China Mobile optical network contract. Ericsson, however, wins some sort of a hype prize - they tested a “5G drone” with CMCC, only days after Nokia tested a mere 4G drone with the carrier.

EU 25-year licences; OTT regs coming, or maybe not; Brexit vs Datacentre; US ready to hand over IANA

So, DTAG wants to hollow out its European OpCos and consolidate everything into those three production centres - cloud-based MVNO farms, basically, located very clearly in the cheaper bits of Europe. That sounds like it might have some regulatory consequences! And indeed, there’s a fair bit of regulatory action this week.

The European Commission is, according to a leaked document, thinking about a standardised European mobile operator licence, with a standard 25-year term and an EU veto on its terms. There would also be a voluntary option to issue multinational or even pan-European licences.

We can also expect a statement in September about the handling of customer data and possible regulation of OTTs. As usual, Oettinger has been briefing the German press that this is an exercise in giving telcos concessions in exchange for investment (e.g. here) although note the remarks at the first link from the Digital Single Market spokeswoman pushing back on that. The tug of war between Commissioner Oettinger and Vice-President Ansip goes on.

Meanwhile, British technology companies and telcos are lobbying the government to do something about the European arrangements that let you process personal data between countries. If the UK leaves the EU without replacing them, they may have to move the data and its processing. As 43% of EU data centre capacity in the top 4 markets is in the UK, that would be a bit dear.

The US government, meanwhile, is saying that it wants to wind up its role in the Internet’s governance as soon as the 1st of October, when the contract between NTIA and ICANN to provide the Internet Assigned Numbers Authority functions runs out. The US Department of Commerce proposes just to leave the job of managing IANA and the DNS root zone to ICANN. Stand by for a row.

Here’s your update on the FCC’s Business Data Services consultation. Public Knowledge has filed its concerns; Cox and the ILECs argue the cablecos’ Ethernet over DOCSIS services mean there’s plenty of competition; Sprint denies it.

Harold Feld blogs the legalities of a case that stops the FCC pre-empting a state ban on municipal broadband.

Comcast takes 1Gbps cable to Chicago, targets 6m DSL users; pay-TV disaster; Charter beats VZB; PE fund buys RCN

Here it comes. Comcast has launched gigabit cable in Chicago. Their VP of consumer services, Marcien Jenckes, makes it abundantly clear that they’re coming for the 6 million households still on telco DSL in their footprint. In Q2, cable net-added 550k broadband subscribers, 360k of whom came from the telcos, and 220k of those went to Comcast.

TV isn’t helping the telcos either - the pay-TV sector generally had a horrible Q2, but the telcos took the cake with a 500k net-loss. 391k of those were from AT&T U-Verse; even though DirecTV net-added 342k, it’s not enough to soak up the U-Verse exodus. It’s blow fibre or die.

It’s no different in the enterprise market. Charter has pushed on into third place for carrier Ethernet service by port count, edging out Verizon of all companies. It’s not just the mergers, either - 60 per cent of new connections went either to an independent or a cableco in Q2.

More upshot: private equity fund TPG Capital is buying both RCN and Grande Comms.

Jenckes also pointed out that Google Fiber had been slower to deploy than he had feared. That may be about to change - more and more 5G and other fixed-wireless trials at Google are seeping into the public domain.

A new independent FTTH deployer has made its appearance in the UK. Community Fibre has filed for code powers, saying it aims to reach 500,000 homes in London with 1-2Gbps fibre. Its biggest problem may be Openreach deciding it now needs to build FTTH in its areas, like they just did in Kensington.

And here’s an effort to model the impact of Long Reach VDSL on UK broadband coverage.

Intel makes ARM chips; Xiaomi shipments down 7m; Samsung = 82% of Android profits

Well, here’s a historic moment. Intel has agreed to manufacture ARM chips on its new 10nm fab lines. Up until now, Intel reserved its superb manufacturing solely to its own x86 designs; for the first time, it’s a contract fab for somebody else. In part this is just a nice-to-have way to get more utilisation on the hugely expensive machinery, but it’s also a confession of ARM’s triumph in mobile and Intel’s failure to make any headway with its own technology.

Of course, the biggest deal imaginable in the ARM world would be the system-on-chip for the next iPhone. Meanwhile, the Intel Optane memory and storage chips have been delayed after manufacturing problems with the DIMM (i.e. RAM) version of the technology, which builds up the circuits in three dimensions.

Xiaomi is one endangered unicorn (sorry, decacorn) right now. IDC reckons its shipments are down 7 million from this time last year, putting it down to fourth place. Management are claiming IDC got the sums wrong, often a bad sign. The company has abandoned its no-ads, web-only distribution model, which has given it a new problem - a marketing budget to feed.

It looks like Lenovo has a margin of -5% on each Android tablet it ships. Fortunately, volumes are declining!

Who’s winning, then? Samsung, according to Strategy Analytics, with 82% of the Android profit-pool, and a powerful new gadget in the Note 7. ZDNet thinks Samsung is likely to sweeten its rather toppy RRP ($800) with gimmes like free Gear VR headsets, hoping incidentally to lock users into a Samsung ecosystem. The case is made further here.

Apple earns about $1/customer/day all the time. It’s also sharply increased its spending on research and development.

Here’s Intel’s Project Alloy VR/AR device.

Son still wants Sprin-T; unlimited is back, max buyout hits $850; China Mobile, Unicom H1; MTS Q2

Masayoshi Son apparently still wants to buy T-Mobile USA. That’s understandable - who wouldn’t want to have a go on that company? - but he also wants to keep Sprint. In the ring, meanwhile, T-Mo announced the return of the unlimited data plan. Before everyone writes at once, there is a throttling level after 26GB/mo, but that’s a pretty huge bundle nonetheless. At the 26GB chilly limit, that implies a marginal data price of $2.88/GB, a substantial price cut compared to the usual $5/GB in its prepaid rate card.

Sprint responded with something similar, plus a massive slug of subscriber acquisition money - the maximum buyout is now up to $850, consisting of up to $650 towards buying out your early-termination fee and paying off device instalments, plus $200 in service credit. When you think that Sprint’s quasi-unlimited plan costs $60/mo for the first line, this starts to look more like vendor financing than marketing spend.

It looks like all the US national carriers will throttle rather than charging overage.

Verizon Wireless has a new line of business - give them $1-2 per install and they’ll preload your app on their Androids.

China Mobile’s H1 was strong - revenue up 7%, profit up 6%, LTE penetration surging. Unicom, though, saw their profits plummet 80%

Singapore’s sovereign wealth fund, Temasek, is selling a stake in Bharti Telecom (the eventual holding company for Bharti Airtel) and another in AIS to Singapore’s state telecoms operator, Singtel, which it partly owns.

EE wants a licence variation to let it use its 10MHz of unpaired/TDD 2100MHz spectrum for LTE, either for the Emergency Services Network or for wireless backhaul.

It looks like MTS is having some pricing trouble.

98 Facebook data points on you; Google’s new IoT OS; exit Avaya? exit Lyft?

Here’s a list of 98 data points advertisers can use to target you on Facebook. Also, if ad buyers can use them to target you, anyone with access to the targeting tool (which is nearly anyone) can find them out about you (see graph.tips for examples).

Google is building a new operating system for Internet of Things devices. It’s optimised for low power consumption and uses a capabilities-based computing security model. That sounds eerily like Symbian.

Wind River has a new cloud-based management system for IoT devices.

Microsoft acquires WebRTC-based game-streaming app Beam. They’ve also delayed the release of Azure Stack, the private-cloud version of Azure, and customers aren’t happy.

Is Avaya about to be broken up or even go bankrupt? Here’s their problem - you can make a very decent CRM/call centre solution out of web tools and Twilio. Having acquired Nexmo, Vonage is trying to pivot to being a Twilio competitor.

How Obama for America tested its IT infrastructure.

Scaling PayPal.

And Lyft seeks a buyer to make that unicorn valuation into cash…but finds it not.

To share this article easily, please click:

August 18, 2016

The STL Partners Digital Investment Database: August 2016 Update

STL Partners published the inaugural version of our Digital Investment Database in early July, and we’ve now issued our first update, including a brief overview of Softbank’s acquisition of ARM and Verizon’s purchases of Yahoo! and Fleetmatics.

You can take a look here.

The database can be downloaded in full by members of our Telco 2.0 Transformation Stream.

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

digital m&a.png

To share this article easily, please click:

August 11, 2016

Innovation Leaders: A Surprisingly Successful Telco API Programme

In our latest report, we explore how Dialog Axiata in Sri Lanka has developed a fast growing API platform that engages developers significantly more than plays by big telcos like AT&T, Orange and Vodafone relative to its scale. How has it achieved this and driven monetisation, innovation and efficiency within the company? And what is next?

Read our analysis here.

This report is part of our Executive Briefing Service and Telco 2.0 Transformation Stream.

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

Dialog Axiata has steadily increased the number of API calls (indexed)

Dialog_API_Calls.PNG

To share this article easily, please click:

August 8, 2016

Comcast, IBM, AWS, Google, MTN: Telco 2.0 News Review

Comcast 1Gbps “coast to coast”; Centurylink, Frontier respond; Liberty Global, BT, KDDI, KT Q2s

Comcast’s CTO says they’re going to have gigabit cable “coast to coast” in the next 12 months, while their set-top box vendors are saying they expect a big ramp-up of sales early next year. Meanwhile, WOW, Cox, and Mediacom are hinting at something similar. DSL operators have little choice but to respond by building out something comparable.

Centurylink, for example, is rushing to get more speed on the DSL and more FTTH in the ground after it lost 65k net broadband subscribers in Q2. It’s also repenting of its efforts at cloud and putting more data centres on the market. Frontier, for its part, is using the whole box of tricks, VDSL2, vectoring, and G.fast, to get 50 or 100Mbps service to more of its base. Importantly, pushing more lines over the FCC’s revised broadband threshhold of 25Mbps pays off immediately, as they can draw down CAF-II subsidy for each one.

Speaking of which, Speedtest.net reckons the typical US subscriber is now getting 50Mbps down, 18 up.

Comcast’s Xfinity Home product has back-up cellular connectivity in case the cable network goes down, but they won’t say which operator is providing it. It’s probably the first product to use their MVNO relationship with Verizon.

Here’s an interesting story about how the New Deal-era electricity cooperatives are being repurposed to run FTTH out into rural America. One customer remembers when they deployed the electricity.

Liberty Global’s Q2 results saw it back in profit, on revenue up 11%, with 227k net-adds less acquisitions. The TV side was a bit mixed - overall, the company net-lost 72k video subscribers, but most of its markets were positive, and its “new generation” TV services (basically TiVo) net-added 304k. 82% of Virgin Media subs now have TiVo. There’s more Virgin-specific data here, with the intriguing note that they said nothing about DOCSIS 3.1 rollout even though they’re in the middle of a major network build. The EU, meanwhile, has signed off on the Vodafone.nl/Ziggo deal.

Time Warner just took an extra 10% stake in Hulu for $583m, implying a much stronger valuation since 2012.

BT’s Q2 results show that EE never managed to recruit more than 98k TV subscribers. OFCOM has decided to take no action on UK football rights. Openreach has got to 24% penetration with its fibre products. The Communications Market Review for 2016 is out.

SFR is cutting one-third of its workforce. The two trade unions involved have agreed to the cuts on condition that the whole reduction is achieved voluntarily and that the redundancy payout is quite substantial (average €120k per head).

A strong quarter at KDDI, which is even somehow managing to make a go of WiMAX. Revenue is up 4.5% at KT, where 20% of their mobile subscribers are on gigabit tariffs. Telkom Indonesia’s profits were up 33% in the quarter, but that was all down to the mobile division, with revenue up 2.4%, while fixed was down 3.5%.

Is the online advertising crisis coming to video next?

AT&T is using its new SDN/NFV setup in carrier services - they now have both a Web site where wholesale customers can search for and order Ethernet circuits by building, and an API to do the same thing automatically.

Top 4 companies all techs; IBM crushed in IaaS Magic Quadrant; Google post-Alphabet; CORD field trials; smartphone latest

At the close of business last Monday, the four biggest companies in the S&P 500 were Apple, Google, Microsoft, and Amazon. It’s the first time the top four have all been tech companies, but as the piece points out, the other industrials in the top 10 are all so characterised by their use of IT that it makes as much sense to call them all technology companies.

Gartner’s IaaS Magic Quadrant is out. They score AWS and Microsoft as the leaders, Google as a “visionary”, and relegate IBM to a “niche player”. Even more crushingly, Big Blue is below Centurylink for “ability to execute”.

aws-microsoft-magic-quadrant.pngThis has triggered one of the classic Silicon Valley ego wars. The report was published more than two months late after IBM apparently kept complaining about the analyst’s judgment, quibbling about data, demanding escalation to higher management, arguing that their PaaS and SaaS products should be counted in, and generally kicking up a fuss.

It could be worse, though - neither Oracle nor HPE even made it onto the chart. Rackspace, which placed respectably but is nowhere near the force it was when it essentially started OpenStack, has taken the hint and is selling the company to a private equity fund.

And Gartner has a point about Microsoft in the cloud - NBC is doing its Olympics streaming from Azure, including basically everything but the CDN. They’ve also just launched new instance types for Azure that provide a high performance GPU. 

In case you missed it, you can still get Windows 10 free if you’ve got a Win7 or Win8 product key.

Here’s an interesting piece on Google post-Alphabet, arguing that a lot of the changes still haven’t been implemented, but an important one that has is that Google CFO Ruth Porat now has to approve significant research projects, putting the self-driving train sets on the back burner and considerably restraining their costs. It also quotes a Googler who says the company is “like a family business, backed by mercurial venture capitalists”.

AT&T’s CORD, we learned last week, is now both supported by Google and an official Linux Foundation project. This week, we learn that it’s going into the field on a large-scale trial in Georgia. John Donovan points out that it took 9 months from starting the project to this point.

Marissa Mayer explains the sale of Yahoo’s websites - some of the shareholders hoped for a turnaround of the online advertising business, others wanted to concentrate on the Asian assets, this was the only way to resolve the conflict.

Theranos CEO Elizabeth Holmes showed up at a chemical conference and handed out both data, and some gadgets, which turned out to be much less original than promised. Uber’s scheme to swap its money-pit of a Chinese operation for shares in the Chinese market leader is running into trouble, as the Chinese anti-trust regulator wants to take a look.

Here’s some detail on Apple sales in China. It does look like Apple’s general problem is that it’s time for some more shiny. Speaking of which, here’s the Samsung Galaxy Note 7. HTC’s Q2 sales are out and they’re pretty awful, but not as awful as last quarter. Android had 97 per cent of the Indian smartphone market in Q2.

Of course, those won’t have been Galaxy Note 7s or anything like that, but probably more like this Brazilian offering and its Chinese-made chipset. Note that not only are big smartphone makers, like Lenovo and Huawei, now emulating Apple and Samsung by bringing more chipmaking in-house, even down-ticket ODMs are having a go. But they’re still depending on ARM designs and Applied Materials machinery.

With Yahoo! gone, Telefonica is no longer interested in Firefox OS, and Cisco having found another way to keep H.264 in the WebRTC standard, there’s no longer much point in Mozilla Hello.

Intel’s Basis Peak smartwatch has been recalled because it keeps overheating and burning people’s skin.

And the Web is 25.

After Ericsson, Nokia’s ugly Q2; EU-China networks deal wobbles; LTE-U row re-ignites

Ouch. Nokia’s Q2 sales were down 11%, all of which came from Networks. Some of this may be due to various products being discontinued after the ALU merger - notably, the whole Alcatel LTE radio line is being dropped. But it’s hardly good news, especially in the light of Ericsson’s rough quarter. Rajeev Suri is trying to sing a happy tune, pointing out that the out-turn was actually better than Nokia’s guidance. But the impact knocks Nokia back into a loss.

The problem was concentrated in mobile (fixed was actually up, no doubt due to the US fibre race) and within mobile, in Latin America and Africa. Nokia’s statement mentions they lost a major LatAm customer, one big enough to have material impact by itself. That sounds like it has to be a Brazilian operator or else a multinational group.

In this context, it’s interesting that the Wall Street Journal thinks the 2014 EU-China trade deal on telecoms kit might be breaking down. The independent anti-dumping commission the deal foresaw still hasn’t been set up, for example, because the Chinese side hasn’t put anyone’s name forward.

They have launched a dedicated satellite for mobile, though.

Qualcomm seems furious about the LTE-U/WiFi co-existence tests. The WiFi Alliance wants to define a quiet channel as -82dBm signal strength or less, which they consider a concession because they usually over-engineer and err on the side of caution. Qualcomm reckons this will make LTE-U unworkable, and would like to draw the line somewhere around -70 (remember dBm are logarithmic, so this is a big difference). Dave Burstein reports data from Broadcom showing that 50% of WiFi links are under -80dBm, which would make LTE-U effectively a jammer and the WiFi Alliance’s offer more than generous. Qualcomm’s technical reasoning is in this presentation.

National Instruments and Bristol University say they’ve demonstrated that massive MIMO works, and delivered a 22x increase in spectral efficiency over the 4G baseline.

ABI Research reckons that WiGig adoption will take off next year, with 180 million chips shipped, and hit half the smartphone market by 2021.

VZ buys another IoT company; 72% of IoT devices non-telco; UK smart meter fiasco gets worse

Verizon has pulled out the cheque book, and bought an Internet of Things company for some $2.4bn. Fleetmatics, as the name suggests, is a provider of fleet management software and therefore a potential connected-car play. This is actually the second IoT acquisition of Verizon’s this summer.

Machina Research reckons we’ll get to 27bn connected devices by 2025, a CAGR of 16%, but 72% of those will be connected via a short-range, “capillary” radio link rather than anything a telco is likely to earn revenue from. They estimate that there might be an additional 1.8bn cellular connections, of which 45% will be cars. Also, slightly less than two-thirds of the associated revenue will come from something other than connectivity.

Here’s SKT setting out a vision for IoT, although we can’t help noticing that they’re making a lot more out of selling TV.

The UK’s mass smart-meter rollout is meant to start now. Unfortunately the specification isn’t finished. British Gas has already rolled lots of them out, and is reaping the competitive benefits, and probably won’t want to replace them. And no-one is saying whether or not the wireless network has the bandwidth to push firmware updates to them over-the-air. What a mess. Nick Hunn’s blog has been essential on this, and this is no different.

China Unicom profits warning; Ronan Dunne, VZW boss; T-Mobile, US No.1; MTN major rethink

China Unicom has announced a profits warning, saying that it expects its net profit for H1 to be down around 80% relative to the same period a year ago. They’re blaming the beginning of tower-sharing and hence of payments to China Tower, higher energy prices, higher rents, and much higher marketing expenditure. This is a symptom of their race to catch up with China Mobile’s 4G deployment. They’ve gained over 8 million net-adds, but at a price.

Ronan Dunne didn’t hang about after leaving O2 UK; he’s joined Verizon, as group president of Verizon Wireless, no less. David Small, the previous incumbent, moves over to run wireline, while Bob Mudge, from wireline, takes charge of integrating XO and building the new Boston network.

He’s got his work cut out. OpenSignal reports that T-Mobile has overtaken Verizon for both 3G and 4G speeds, while VZ had a hair more 4G coverage, Sprint had the best 4G latency (although what was the distribution like?), and AT&T came top in precisely nothing. T-Mobile celebrated by deploying 700MHz LTE in the Bay Area and bringing back unlimited data for some people, some of the time.

UK mobile revenue fell slightly this year, per OFCOM, while fixed Internet service revenue rose quite strongly.

MTN has announced a major strategic review in the light of falling voice revenue and the MTN Nigeria fiasco.

And LG U+ has announced profits up 13% for the quarter.

Hack the brakes; hack Telegram; hack Turkish coup plotters; probably use a password manager

You can hack the brakes of a Jeep Cherokee via Sprint’s network. Oh joy.

If you can manipulate SMS, you can probably hack the hardened messaging app Telegram.

Turkish coup plotters chose to use a weird amateur secure messaging app that hasn’t had any maintenance since 2014. That went about as well as you might expect.

Don’t make people change their password, it’s not helping.

Google and password manager app Dashlane are working on a universal, standard password manager API. This is such a good idea.

A survey shows the British public would sell their personal data for £2000. This is vastly higher than anyone would actually offer.

Apple has started paying bounties for new bugs, up to $200,000 a bug.

China doesn’t want you to use ad blockers.

To share this article easily, please click:

August 5, 2016

How effective is your omni-channel strategy?

Participate in the telco digital engagement benchmarking study here.

In a climate of Black Friday shopping, online exclusives and digital retail giants like Amazon and Asos flourishing, the need for telcos to compete in the online world has never been clearer. Customers are engaging with telcos through digital channels more and more, as social media and search engines overtake print and television as the most effective way of reaching customers. In a 2015 ‘point of view’ report Deloitte stated that 45% of smartphones owners were making purchases using a mobile device every month, and in addition complaints and queries are increasingly being made online rather than in person or via the phone. This shift in the market highlights how important customers’ digital engagement and satisfaction is, as more and more customers are assessing companies’ services through their digital brand experiences.

Creating a seamless, intuitive and trusted digital experience should be at the forefront of all telecom business models, such as through innovations in omni-channel strategies. An omni-channel approach, i.e. integrating online and bricks & mortar customer experiences, can help improve the effectiveness of telecoms’ marketing into a more sophisticated ‘single-view’ picture of their customers allows for better targeting of their wants and needs. This will help reduce churn and increase ARPU.

An omni-channel focus will also bring increased conversion rates and reduce cart abandonment through a larger availability of convenient online shopping options and secure payment solutions. This can help improve customer satisfaction, retention and loyalty. Not only will omni-channel solutions increase revenue in these ways and more, it will also save companies money, through, for example, reduced time spent on resolving customer service issues. There should be no need for customers to repeat simple information or be passed around to different areas of the company as a clear and unified picture should be available rather than customer data remaining stuck in specific siloes. The need to develop omni-channel solutions should be clear, and many telco companies are some way to providing this seamless picture to their customers.

digital customer engagement.png

STL Partners has created a Digital Engagement Benchmarking Tool which can assess your operator’s performance in digital maturity, and highlight areas where omni-channel development would be beneficial. A free, customised report will be produced, which tests your company against industry competition and ‘best-in-class’ performers outside telecoms, the metrics covering digital sales & marketing, digital customer experience and omni-channel strategy. The report will be sent to you by the end of August; all responses will need to be completed by 12th August. If this is something you would be interested in, complete our 5-10 minute survey now. All information submitted will be treated as strictly confidential and your operator (or its data) will not be identified in any reports to send other participants in this study, or other third parties. 

To share this article easily, please click:

August 4, 2016

Telco NFV & SDN Deployment Strategies: Six Emerging Segments

In our latest report, we explore in detail how thirteen leading operators are addressing NFV and SDN. By exploring each management team’s vision for the technology and the current implementation activities, we have been able to identify six segments - from dynamic ‘NFV Business Model Transformation Pioneers’ to more prosaic ‘Utilitarian Adopters’. The report also outlines three major ‘best-practice’ recommendations for other players.

Read the analysis here.

This report is part of our Telco 2.0 Transformation and Future of the Network Streams.

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

NFV-segments.jpg

To share this article easily, please click:

August 1, 2016

Q2 Special: Telco 2.0 News Review

Softbank x ARM; Apple, Samsung, and Huawei Q2s; Q2 shipments

Softbank astonished the world last week by buying ARM Holdings, the British chip designers behind 95% of the world’s mobile devices, for $32bn in raw cash. That’s “offer you can’t refuse” territory, especially as ARM is typical of successful tech companies in that its employees own a lot of the company’s shares, and the deal instantly makes millionaires of quite a few of them.

The attraction is pretty obvious - as well as the huge mobile business, ARM’s Internet of Things product line is growing fast, and there is more and more interest in using its technology in the data centre and network domains.

Interestingly, Japanese currency traders have been aware for some time that there was an unknown, but very big, buyer in the market for sterling. It turns out Softbank has been accumulating the currency it needs to close the deal for weeks, ever since the big post-referendum sell-off. This points to a couple of things - first of all, the 15% devaluation of sterling made ARM 15% cheaper without affecting its revenue as it prices in dollars, but secondly, as always with Softbank, the clever tricks leave you wondering where Masayoshi Son is going with this.

Softbank promised to increase the company’s headcount in the UK, double it abroad, and leave the current management in place - you can see why the deal was attractive, but you might also argue Softbank has paid a silly price for a deal driven by sheer opportunism. And it’s no wonder the transaction has become politically controversial - the new UK government had just trailed a new, more interventionist industrial policy when it backflipped and greeted the deal as great news. Will ARM’s precious stockpile of patents, for example, stay within ARM Holdings plc or be transferred to some other Softbank company?

Meanwhile, Apple Q2s are in. Paradoxically, although profits for the quarter were down 27% and revenues 15%, the shares rose 6%, as the news was significantly better than expected and in line with Apple’s own forecast. The problem can be summed up as “everyone’s waiting for the new phone in Q3, and in the meantime, the iPhone SE is taking the strain and that’s not as pricey”. Services, interestingly, were up by just under a billion - this article makes the case that the company is moving from a growth stock model driven by increasing the consumer base to a recurring dividend model driven by services.

This may be easier said than done - here’s a deep read on the problems they’ve encountered trying to get deals with the TV business. Also, it might not be the moment to turn away from the flagship smartphone battle, as it turns out shipments are growing again, and especially Samsung’s. Their revenues for Q2 were up 5%, and profits were up 18% - unlike Apple, this implies their margins and average selling prices are improving. Galaxy S7 Edge devices accounted for half the sales by value.

Here’s a review of the own-branded devices Reliance Jio is selling for its 4G network. Pricing is as low as $45, reflecting a 4G bill-of-materials premium that may be as low as $5 and significant economies on the network side. Here’s a review of the Meizu Ubuntu Touch tablet - it’s positive on the hardware, much less so on the OS.

Huawei H1 results are in, and they’re decent - revenue was up 40% year-on-year, much of which was down to the consumer business. Huawei is No.1 in China, and it’s gaining share off Apple. However, as usual, margins disappointed - the targeted 18% operating margin was missed and they ended up at 12%.

Vestberg goes west; vendors’ 5G demo plans; FCC signs off 11GHz of 5G spectrum; Juniper Q2

Huawei isn’t the only network vendor with margin problems. Three Ericsson stories follow: Q2 results showed a 22% drop in operating income, driven by a 7% drop in sales and the loss of 9 basis points of margin. Although margins were still 32% - way higher than Huawei’s - the balance between relatively commoditised hardware and margin-rich services business is shifting the wrong way. The Swedish newspaper Svenska Dagbladet alleged that Ericsson has been stuffing the channel, recognising revenue even before it billed the client. (It certainly wouldn’t be the first time a vendor got in trouble that way - remember Nortel?)  And the CEO, Hans Vestberg, has resigned.

Over at Nokia, meanwhile, everyone seems to be full of beans and dreaming of (what else) self-driving cars. It’s about 5G, of course.

In more concrete news, Inside 5G has details of the vendors’ plans to demonstrate 5G technology in the US, based on the Special Temporary Authorisation forms they’ve filed with the FCC. Nokia will be testing something in the 2.1 and 2.6GHz bands at its Sunnyvale site and at Bell Labs through August and September. Ericsson will be showing a 15GHz device for two days next week at T-Mobile HQ. CableLabs is working in the 71-75GHz bands, on what sounds like channel modelling. And National Instruments wants to demonstrate a variety of 5G technology options with its SDR products on the 3.5, 19, 27, 60, and 76-79GHz bands. Nokia also tested a 73GHz system with Bell Canada.

That’s only for starters, though. The FCC signed off the Report and Order on 5G spectrum, which finds an additional 11GHz for mobile users like so:

  • The proposal for licensed use in the 28 GHz, 37 GHz and 39 GHz bands makes available 3.85 GHz of licensed, flexible use spectrum. It provides 200MHz block sizes, license areas (Partial Economic Areas), technical rules, and operability across the exclusively licensed portion of the 37 GHz band and the 39 GHz band to make 2.4 GHz of spectrum available. There are  two 425 MHz blocks for the 28 GHz band.
  • Unlicensed use in the 64-71 GHz band makes available 7 GHz of unlicensed spectrum which, when combined with the existing high-band unlicensed spectrum (57-64 GHz), doubles the amount of high-band unlicensed spectrum to 14 GHz of contiguous unlicensed spectrum (57-71 GHz). That 14 GHz band will be 15 times as much as all unlicensed Wi-Fi spectrum in lower bands.
  • Shared access in the 37-37.6 GHz band: Makes available 600 MHz of spectrum for dynamic shared access between different commercial users, and commercial and federal users.

The huge 7GHz of unlicensed up in the 60s is exactly where Facebook’s Terragraph mesh-WiGig project is aiming.

Dave Burstein is concerned that the millimetre wave spectrum will require such high network density that it will be a natural monopoly. He also reckons low-band 5G will be coming much earlier everywhere except the US, where the 28GHz fixed-wireless train is puffing down the track. One answer to the competition problem is network-sharing, and here are some details of the new China Tower Corporation.

OFCOM notes that WRC-15 picked several bands for 5G that are used in the UK for fixed wireless, and issues a consultation about its future spectrum needs.

Broadcom reports to the FCC on how the talks between LTE-U proponents and the WiFi industry are going. Two take-home messages: they’re going well, but a current sticking point is the definition of “quiet”.

Here’s an interesting blog post about using Jim Gettys and Dave Taht’s Bufferbloat work to fix other performance problems in WiFi.

Juniper’s Q2 was OK, although interestingly, it’s increasingly reliant on telcos.

Is it 5G use cases you’re after? This 95 page 3GPP Technical Report is full of them, says the 3G, 4G, and 5G Wireless Blog.

And is Pokemon Go driving material costs or revenues for the mobile operators? Says Dan Rayburn: no. Presumably that’s why T-Mobile USA was able to jump in on the publicity by zero-rating the game.

AWS, Microsoft, Google, Oracle Q2s; CORD gets Linux, Google backing; Amdocs spreads ECOMP

Amazon Web Services saw $2.9bn in revenue for Q2, and $5.4bn for the first six months of 2016. This puts them ahead of their goal of $10bn for the full year, and they intend to open nine new availability zones, in four regions, in the next 12 months.

Microsoft’s Q2 results delivered 5% revenue growth. The key contributors were the Intelligent Cloud unit, up 7% at $6.7bn, and Productivity and Business Processes, up 5% at $7bn. (It’s worth remembering that Office 365 and Dynamics Online live in Productivity, rather than Cloud.) Meanwhile, “More Personal Computing”, which includes hardware and Windows, lost ground. The most purely “cloud” element of Microsoft, Azure, apparently doubled its revenue in Q2, and they are claiming annualised revenue of $12bn for “Commercial Cloud”.

Canalys reckons the total cloud infrastructure market was $9.5bn for the quarter, growing 50% annually, with the top four (AWS/MSFT/Google/IBM Softlayer) taking 60.5% of that. If both Microsoft and Canalys’ numbers are true, Microsoft must be gaining share rapidly. Looking ahead, they’re pushing PaaS rather than IaaS.

Google’s Q2s are in. Earnings were better than expected, thanks to both strong sales and lower traffic-acquisition payouts. The train-set businesses in Other Bets are still a money pit, as expected. But the really interesting thing may be that Google’s (as opposed to Alphabet’s) “Other” line item, which includes their cloud products, has kicked up from 24 to 33% growth, edging over the $2bn/quarter mark, or 11 per cent of their revenue. CFO Ruth Porat says this is down to better sales of enterprise cloud, and gives the credit to their ex-VMWare enterprise chief, Diane Greene.

She also acknowledged the acquisition of Webpass, a small San Francisco-based WISP, and suggested that Google Fiber might use more fixed-wireless in the future as 5G and WiGig become available.

Oracle’s results tell a very clear story. Overall revenue was flat for the quarter, down 3% for the year, while cloud was up 49% for both. So they’re buying Netsuite, a cloud-based accounting company that Larry Ellison funded back when it started up in 1998, for some $9.3bn.

Intel has open-sourced its Rack Scale Design technology for designing and automating big data centres. That makes two open data centre forums - RSD is parallel to Facebook’s Open Compute Project, if it’s not on a collision course with it. The good thing about standards is that there are so many of them, as someone said.

Data centre space is selling fast.

AT&T’s Central Office Re-Architected as a Data Centre project, CORD, is now an open-source project in its own right, under the aegis of the Linux Foundation. And it’s getting support from Google. The next priority is to build a hardware platform for its mobile version, M-CORD, for between $10-15,000. At the same time, the Broadband Forum has joined the project to link in the FTTH and cable worlds. AT&T has also signed up Amdocs as a systems integration partner in order to push its related open-source NFV platform, ECOMP, to other telcos.

On the other hand, Verizon CFO Fran Shammo says the company will make a decision in Q3 about whether or not to sell its 48 data centres.

Verizon, AT&T, T-Mobile, Sprint Q2s; Comcast Mobile

Verizon Q2s are interesting, to say the least. Revenue was down 4% year-on-year in wireless, and group-wide revenues, including fixed and enterprise, were off 5%. On the other hand, postpaid retail net-adds were 615k, implying connections growth of 3.9% year-on-year. That’s strong, but it’s nothing like the 1.1m achieved in Q2 2015. Wireless EBITDA margin is 47.5%, rising again after a nasty dip last year. But the 3.8% growth in EBITDA margin is not quite enough to keep up with the drop in revenue.

And wireline is net-losing subscribers, even FiOS FTTH subscribers (down 13k, with 41k cancelling video), while its revenue is flat to falling. When you add in the troubled enterprise and wholesale operations, total wireline revenue is off 2.4% year on year, and its EBITDA margin has dived five percentage points this year. So, will there be more FiOS builds like the one in Boston? Lowell McAdam seems to say so, but leaves himself an out.

Against this background, they’ve decided to spend $5bn buying Yahoo!’s core business.

Dave Burstein quotes Brett Feldman of Goldman Sachs pointing out that there wasn’t enough free cash flow in the quarter to cover the dividend payout, and notes that VZ’s CAPEX/revenue ratio is falling steadily, which erodes their premium-carrier status. He is deeply sceptical of their ability to run Yahoo! better than its management or sell ads better than Facebook or Google, and points out that there is a long, sad history of telcos losing money in content. VZ’s competitors seem to agree.

Speaking of competitors, here’s Sprint’s Q2. They reported 173k postpaid net-adds, and they claim to have a positive porting ratio for the first time in five years. On the other hand, they net-lost 331k prepaid customers, and the final score of 377k total net-adds includes no fewer than 528k wholesale/M2M. And the company lost $302m in the quarter, compared to $21m a year ago. As predicted, CAPEX is almost at a standstill.

Interestingly, the network management contract with Ericsson is up for renewal, and Sprint is taking part of it back in-house. The original contract was signed in 2009; somehow we doubt, given Sprint’s vicissitudes in the meantime, that Ericsson will put it in their sales pitches.

Over at T-Mobile, Q2s are in, and it was their 13th successive quarter with a million-plus net-adds. Specifically, there were 646k branded, postpaid phone net adds plus 476k prepaid, and service revenue was up 12% at $6.9bn, with $225m net income. John Legere said some stuff.

AT&T is planning to speed up its fibre rollout, aiming for 3m passes a year for the next four years, which would be equivalent to 20-25% of their footprint. Except it’s not - they’re likely to build quite a bit of that out-of-footprint, overbuilding into other operators’ markets, notably Windstream and Fairpoint. The plan is fairly simple - the target areas are places where fibre can be deployed for cheap on aerial plant, and AT&T’s LTE network already has backhaul.

AT&T’s Q2s, meanwhile, show the continuing re-orientation of their Business Solutions division. Overall, its EBITDA and revenue are flat, but underneath that, the cloud-based Strategic Services line is growing fast at the expense of the legacy products. SBS is now 36% of business wireline, or 16% of the total line-of-business, as 55% of it is now wireless.

Fixed broadband revenues were up 15%, driven by the fibre rollout. Although they’re keen to hype video, in fact it was up only 0.8%, while the Entertainment line’s EBITDA was flat at 25%. Wireless had a 1.4m net-adds quarter, although only 185k of those were branded smartphones. Wireless revenue was down 0.4%, but margins increased 130 basis points.

Comcast Business is still growing like hell. Meanwhile, the parent company has launched a new mobile division and confirmed that it’s invoked the option to have an MVNO on Verizon Wireless’ network it’s had since 2011.

They’ll have to contend with Layer3, a start-up cableco (!) that turns out to be financed by Altice.

Facebook, Twitter Q2s; Salesforce dumps all but Samsung and Nexus; the end of Skype P2P

Facebook’s Q2s are in, and revenue is up 59% at $6.4bn, while daily-active users are up 15%. To put it another way, their ARPU is rising strongly. Out of that, $2.7bn stayed with the company as operating income, or an operating margin of 43%. 84% of that money comes from mobile ads, and it’s another success for their strategy of restricting ad volume and concentrating on quality:

In Q2, the average price per ad increased 9% while total ad impressions increased 49%. The reported increase in price was again driven by the continued mix shift towards mobile where we only show higher price News Feed ads

Twitter, meanwhile, is stagnating, with no user growth to speak of, and still struggling to monetise.

Salesforce is giving up on trying to keep on top of all the Android fragmentation, and will only support Samsung and Google Nexus devices from now on.

Microsoft has announced the end of the native Skype clients for Mac OS X and Linux machines. It’s a historic moment - the Windows app was long since rewritten to be a SIP client plugged into Microsoft’s client-server infrastructure, and the replacement uses WebRTC, so this means the end of the Skype P2P cloud. Let that sink in for a moment.

Meanwhile, the free upgrade period for Windows 10 is over, and the first anniversary update is coming. Microsoft Stream is their new platform for business video. And Redmond is cutting another 2,850 jobs from the mobile devices business.

ICANN is tearing itself apart over the question of who has the right to the top-level domain .gay - the Economist Intelligence Unit is somehow weirdly involved.

And here’s how Pokemon Go was pre-invented in Manchester in 2009.

CMCC adds more fibre than everyone else; new Vodafone AMAP boss; Orange 4G for Africa

Chinese operators are adding fibre at a ferocious rate. China Mobile added 3m net FTTH subscribers in June alone, more than the rest of the world’s operators managed together. The previous record was 2.65m for March, and that was China Mobile too. The competition isn’t going quite so fast, but they did manage another million between them. Also interesting: UnionPay, the Chinese interbank payments operator, is suffering from competition from mobile money.

Here’s a positive take on Reliance Jio. We note there still isn’t, still isn’t a launch date.

Vodafone has picked former Orange deputy CEO, Vivek Badrinath, to run the Africa, Middle East, and Asia-Pacific division. He replaces Serpil Timuray, who is promoted to group Chief Commercial & Strategy Officer. Both jobs report directly to Vittorio Colao.

Telkom Indonesia reported net income up 33% in H1. Basically everything was good.

Orange’s CFO Ramon Fernandez says the firm will have 4G in all its African markets by 2018, and it’s looking at investing in FTTH there.

In South Africa, 4G deployment has triggered a surge in data traffic and some of Telkom’s 2.3GHz sites are congested.

Oi owns part of Angolan operator Unitel, and it has been trying to get a substantial dividend it claims to be owed paid out. The Angolan shareholders say they offered $900m to buy Oi out, but they refused. Oi says it wasn’t them, but something called “Samba Luxco”. We can see this being a long one.

And here’s a decent Q2 from America Movil.

BT, O2, Orange, Vodafone UK, TI Q2s; Openreach decision

BT’s Q2 was, of course, the first with EE consolidated in. It looks like EE had a poorish quarter, as did most of BT except for Consumer, which saw 9% revenue growth as it sold even more football. Interestingly, BT’s reporting doesn’t give previous years for EE - you wonder why. More importantly, OFCOM has made its mind up, and the big decision is: Openreach stays with BT. That said, Openreach must become a legally distinct subsidiary company, with independent non-exec directors and its own P&L, and BT has been set some investment benchmarks.

This kicks off a consultation period running into October. With a view to that, Vodafone, Sky, and TalkTalk have mounted a new campaign to detach Openreach, called “Fix Britain’s Internet”. They probably didn’t mean this, though. Those three, of course, are the co-investors in CityFibre’s FTTH build in York. Light Reading reports that Sky has achieved a 12% take rate in the first three months and is confident of getting to its target of 30-40%.

Orange announced a Q2 much improved by banking the money from the sale of EE. It was the fourth successive quarter of growth at Orange, but the measure of that was probably that the exciting high growth African division grew 2.3%.

Meanwhile, CK Hutchison is suing the European Commission over its decision to block 3UK-O2, while O2 UK’s Q2 sales were down 4% in constant currency. Vodafone UK’s Q2 was also pretty rough - off 3.2%. Vodafone blames this on the billing system, but it can’t be their billing that spoiled O2’s day, can it?

Telecom Italia announced what it calls its best quarter since 2009, and signed a joint venture with Fastweb to build more FTTH outside Milan and their existing footprints.

Ziggo-Vodafone.nl looks like it will go through. The Euregulators have cleared DTAG’s vectoring upgrade, on condition they accept more duct access, and neither Vodafone nor ECTA are very happy.

The job guarantees offered by Altice when it bought SFR are about to expire, and Altice is now going to cut 5,000 jobs. The French government is not happy either.

And you just knew Free’s phasing out of national 3G roaming would be quirky. Free intends to cap the speeds offered to roaming users at progressively lower levels. Presumably the idea is to encourage holdouts to get 4G?

To share this article easily, please click:

Telco 2.0 Strategy Report Out Now: Telco Strategy in the Cloud

Subscribe to this blog

To get blog posts delivered to your inbox, enter your email address:


How we respect your privacy

Subscribe via RSS

Telco 2.0™ Email Newsletter

The free Telco 2.0™ newsletter is published every second week. To subscribe, enter your email address:

Archives

Telco 2.0™ is produced by: