Ring! Ring! Hot News, 28th July 2008
In Today's Issue: All the Vodafone that's fit to print; just what's in that tall glass of mobile data?; the Spanish builder menace; AT&T discovers principled objection to mergers, porcine aviator sighted; Sprint flogs towers; Sprint's multi-gigabit radio backhaul, departure from the NGMN; is MediaFLO short of spectrum?; frantic open-source activity; Nokia pays for friends; Intel dumps Ubuntu from its mobilinux; Win95 on a Nokia N810; better voicemail for all; Bundesnetzagentur's odd idea of regulation; BT begins to move on fibre
Vodafone found that once the stock market doesn't like you, there's very little you can do about it this week. You wouldn't imagine that interim results including the phrases "first-quarter £9.1bn revenue" and "expecting full-year profits around £11bn" could scare the markets, but that's what happened -- vodashares were marked down by around 11 per cent. The monster carrier responded by offering to buy back a billion pounds' worth of stock. Yet if the best repartee is a parliamentary majority, as Prime Minister Disraeli once suggested, the best trading statement is usually a bag of cash.
Perhaps the markets were reacting to the enigmatic surge in data revenues? These were up by some 29 per cent, and are marching steadily towards the billion pound mark -- which you'd think is great news for Vodafone. However, like all carriers, Vodafone has managed to get its non-SMS data traffic moving by the simple expedient of slashing prices and broadening the offer to emphasise its role as a mobile ISP. (There's a good reason why the star mobile data product across all the UK operators is a little Huawei E220 radio modem for your laptop.) Back in the dotcom boom, the argument for mobile data was a) that it would be additional to voice and messaging revenues and b) that it would be a high-margin branded product in its own right rather than just being bulk IP traffic.
However, what we're actually seeing is quite the opposite - voice and messaging are the high-margin products, non-SMS data services are substitutes for them, and the top selling service is a pipe in the sky. How much of the extra data usage is made up of instant-messaging or social network usage that competes with Vodafone SMS and branded/portal IM? How much is Skype traffic from laptop users? Perhaps the City recognises these issues. Or perhaps they just thought "No-one ever got fired for selling Vodafone (not since 1999 anyway, and that's before my time)"? Alternatively, they noticed this bit in Arun Sarin's statement:
According to the group, economic and competitive effects particularly impacted Spain. Sarin added that the British mobile phone group had been hit by the decrease in economic migrants who had been working in Spain, often in the construction industry. He said the slowdown in Spain's construction industry had also resulted in a reduction in the number of builders who used mobile broadband devices when working on sites.
Tradesmen and small businesses have traditionally been a huge market for the industry; this was one of the biggest surprises at the very beginning of Vodafone's history, when they expected bankers and got a surprising number of plumbers. It's also the same pattern we see in the emerging markets, where so much growth and creativity comes from small independent traders. So this probably isn't good news.
Speaking of monster carriers... AT&T is objecting to the Sprint-Clearwire WiMAX deal, on grounds that it would lead to an undesirably high concentration of ownership in the market for...wait for it....leased surplus spectrum from the educational fixed television sector. The FCC assigned some speccy from the 2.5GHz band for the use of educational institutions who wanted their own little TV station, years ago. Not many use it, and the ones who don't often lease the spectrum out. Obviously, the lessors have to be people who use the 2.5GHz band. And who does that but Sprint/Clearwire?
Perhaps it's a real concern, but it certainly sounds a lot like chutzpah coming from the operator formerly known as SBC/BellSouth/Cingular/AT&T Wireless/AT&T (Ma Bell) and probably some other mergers we forgot. Relatedly, Sprint has also parted with the ownership of thousands of cell towers; rather than the kind of giant network-outsourcer deal we often talk about, however, it's more of a financial exercise.
Meanwhile, here are some details about how Sprint/Clearwire plans to backhaul its WiMAX base stations: by provisioning them 1.6Gbits/s of point-to-point microwave Ethernet, apparently. It's a reminder that radio may be black magic, but there are times when it can even rival fibre. If you already have towers, it saves so much trouble digging up the road. Sprint, meanwhile, has quit the NGMN, apparently on the grounds that nobody cares about Qualcomm's UMB any more, and anyone who doesn't want LTE will go for WiMAX.
An interesting piece at Daily Wireless which raises the question of whether MediaFLO has been left standing in the race for mobile TV spectrum, touches on the possibilities of ultra-localisation as a way of making mobile TV actually interesting. It also reminds us all how smart the old IPWireless team, now with NextWave, really are. (They've also just taken their original good idea about UMTS-TDD as a mobile TV medium and applied it to WiMAX.)
The febrile activity in the mobile OS and developer platform world continues, and it's like a bathful of angry octopi down there. Linux folks at OSCON were threatening to move on from their 18% share of the embedded OS market to attack the 43% or so held by proprietary and non-Microsoft products. The president of the Symbian Foundation is promising to push for mass developer adoption.
He'd better. Nokia bewails that its developer community is mostly people they pay. This isn't necessarily a bad thing, though; hackers need a business model, too, and so far there isn't much in the way of a market for Symbian apps outside Nokia and the operators.
Linux people like nothing more than a good row about the content of an OS distribution: and Intel obliges, by removing Ubuntu components from its own Moblin mobile Linux implementation. Expect more tensions between closed and open innovation models to come. Journalists meanwhile like nothing more than a really improbable merger tale, and analysts obliged, suggesting that Android and Symbian would merge. They didn't say how, and getting an octopus to embrace a squid doesn't produce a beautiful dolphin -- just a mess of tentacles. And Nokia's linux shop gets MacOS and Windows 95 running on an N810. You have to ask why, don't you... still, nice to be paid to do something in these economically challenged times.
That's perhaps enough techieness for the time being. Here's a service that replaces your carrier voicemail and routes messages into your IMAP e-mail, thus rendering voicemail somewhat less user-loathing. Naturally, there's no business model for it yet, except for asking readers of The Register to make suggestions. And if that doesn't work, we think they'll start going to VC meetings with a kitten, a meat cleaver, and a banner reading BUY ME BEFORE I KILL AGAIN. (The Reg says that their lack of a business is "like any self-respecting Telco 2.0 company". Cheeky little monkeys.)
A spectre is haunting Europe; the spectre (or possibly sceptre?) of Viviane Reding. The EU Commission slaps down the German Federal Networks Agency; it can't force a new entrant to the market to pay an "unjustified" charge to the incumbent. This is one of those things where the only possible answer is "I should bloody well think so too", as it seems crazy, but the German regulator did actually try to make new DSL operators pay a tax to Deutsche Telekom. Now that's what I call regulatory capture.
And finally: it's happened! BT wants to spend £1.5bn on fibre-to-the-cabinet. Watch this trench for more details...