Ring! Ring! Hot News, 5th May 2008
In Today's Issue: DT/Sprint murder'n'acquisition poses world's biggest OSS BSS MESS; shareholders scared; political egos swell; warming up by buying OTE; and a side order of Nokia Ovi content, please; Mobistar MVNO mastery; Microhoo muffed; Yahoo+Jajah; huge Brazilian mergermonster slithers out of rainforest, eats shareholders; Virgin Media intros TV-over-IP-over-TV-over-IP; Globe Tel intros TV-over-3G; Sony Ericsson offers nightmare coding turducken; all-open-source mobile dev framework Flyer
No! Don't do it! Think of your family! It's one of those moments where someone's about to be very ill-advised indeed, and the rest of us can but watch in horror and incredulity. Yes, we said Deutsche Telekom was a company with a huge overseas acquisition in their future, and guess what? They want to buy...the Telco USSR, Sprint Nextel. Apparently DTAG considered a bid for Nextel way back when - so no wonder they're interested in getting it cheap, with Sprint thrown in free (they spent $40bn on Voicestream alone - they're now looking at $23bn for the whole Sprint empire). But you have to wonder why anyone would want this: let's see, that's German, British, Dutch and US GSM and UMTS, German DSL, VDSL and even some ISDN, CDMA2000 at mainline Sprint mobile, iDen at Nextel, WiMAX at Sprint XOHM, more GSM/UMTS in Central Europe, FLASH OFDM in Slovakia and UMTS TDD in the Czech Republic. To say nothing of their competing global carrier operations, and WLAN hotspots, and SprintLink US fibre, and T-Systems call centres...
It's like a charming screwball comedy entitled Converge This!, in which we follow the exploits of two hilariously ill-matched OSS-BSS engineers, Sven and Sven, as they strive to integrate the back-office operations of a giant mobile phone company that uses literally every network protocol in existence...no wonder the Frankfurt stock market doesn't like it at all.
What is considerably less funny is the answer to our question: basically, the German government, which owns a large chunk of DTAG, is mad keen to see them do a "Made it, Ma! Top of the world!" moment in Washington (well, Overland Park, KS) by becoming the US's biggest mobile operator. They may have forgotten that the character in Raoul Walsh's film said that whilst standing on top of a giant tank of petrol in an oil refinery on fire, being shot at by the police....
But what is funny is that some US politicians apparently think German ownership of Sprint would be a menace to national security...
More seriously, and charitably to Sprint, Telco 2.0 experts suggest that this might actually make some kind of sense. If DTAG was to shutter Sprint's dodgy retail businesses and fold the customers into their own operation, or sell them off, they would have the makings of a strong wholesale platform in the US, and network assets and spectrum to beef up their own rather thin UMTS coverage. They'd also have some opportunities to build up their BT Global Services clone, T-Systems, in the US. But the chances don't outweigh the general presumption against monster telco mergers.
DTAG, meanwhile, is buying a chunk of OTE; which should be enough political trouble for anyone without taking on the Congressmen From VerizonAT&T. Less scarily, they've also signed up for Nokia Ovi; partners, products, and platforms, people.
Speaking of those, Mobistar is reaping the benefits and pains of its MVNO-positive strategy. Its volumes are sharply up, and the MVNOS account for a near majority of net adds - this is precisely what we need channel partners for. However, the downside is clear - ARPU is declining, as the average price they charge for a minute of use converges with the wholesale rate they charge the MVNOs. They need another source of revenue...
In other M&A horrorshow news, Microsoft has walked away from the Yahoo! deal; that's sense, Withnail, as they say. Apparently they can't agree a price. Yahoo is apparently concentrating on the league, pushing on with its new voice & messaging development - they've decided to use Jajah for the voice component, a decision Telco 2.0 heartily endorses.
You don't have to be a decadent Western plutocrat to go in for a huge merger: the rising forces of Brazil are quite keen too, with Telemar and Brasil Telecom looking at a merger.
Virgin Media, meanwhile, reckons it has the cure for the BBC iPlayer business model explosion. They're going to offer the iPlayer stuff through their cable TV service. Let's get this straight: it comes down the same wire from the same head end, through the same STB, but for some reason these bits - call them TV bits - don't count towards their costs? We wonder if the BBC is paying them a contribution.
Here's an example of an innovative use of underused telco assets. Globe Telecom in the Philippines is delivering mobile TV over the circuit-switched video call channel, with the help of NMS Communications. Neat.
Sony Ericsson wants to get into the mobile-developer game so bad they've invented a hybrid of Java ME and Flash. Think of it like this: it's a Java applet in a webpage, with a little Flash plugin and some Flash code embedded in the Java. That's going to be a right one to debug...and it also happens to break the hearts of web designers everywhere. (Couldn't they have broken the "back" button and worked a frame in there somewhere, too?) This, however, looks more fun.