Ring! Ring! Hot News, 19th January 2008
In Today's Issue: 2SBM - boosting productivity in the trucking industry; Google Maps on the iPhone eats telcos; Motorola sacks 4,000; Intel profits down 90%; Nortel goes bust; Samsung reorganises; Sony Ericsson loses money, ups prices; Sprint launches voice price war with barrage of sharp boomerangs; subsidy queue forms on Pennsylvania Avenue; munifibre advocates eye pile o'cash; VZW moves up LTE to NYE '09 if AWS OK; 700MHz spectrum traffic jam; Infineon has LTE chips; third Iranian GSM licence; Batelco buys Indian operator; Rwandatel sells out of phones, goes to China for more; infrastructure sharing in India; Latvia starts the big dig
Here's something interesting; remember the Two-Sided Business Models (2SBM) report? A key case study in it looked at the possibilities for improving load factors in the road transport industry - reducing the mileage trucks spend transporting air from place to place. The CEO of UK transport major Eddie Stobart plc is floating the idea of a tax on empty truck movements as a way of saving energy and reducing traffic congestion. He reckons that every percentage point of capacity utilisation is equivalent to £100 per truck per month, which implies that a 1% gain in load factors across the entire UK trucking fleet would equate to a gain of £540m to GDP.
On average, trucks achieve a load factor of 70%, but Stobart claims theirs achieve 84% through some rather interesting IT systems; if the whole industry could match this, it would gain about £8bn a year, to say nothing of the social benefits of saving fuel and road space. Stobart is quite a bit more aggressive than we were; our calculations put the benefit of a 5% improvement at £218m a year!
Similarly, when an iPhone user needed to buy a tyre in a hurry, it was only a Google Maps search away...but where was the telco in all this? Carrying the bits. Grim, but then everything was fairly grim this week. Motorola sacked 4,000 employees, three-quarters of whom worked in the moribund handsets division which still hasn't been either revived, sold or closed down.
Intel's fourth quarter profits fell 90%, and the company promised analysts a depressing year of poor sales and falling margins. Nortel Networks went one better and filed for bankruptcy one day before it was due to make a $107m interest payment. Samsung announced a major reorganisation in the light of plummeting demand for all its products.
Sony Ericsson, meanwhile, having succeeded in beating Motorola into fourth place in the world mobile makers' league, announced a €73m loss and decided to concentrate on more expensive gadgets, which is a tad counterintuitive. What will be interesting to see is what replaces UIQ on their handsets after it was shut down last week.
Sprint-Nextel, meanwhile, was pushing hard to squeeze cash out of its iDEN network, which happens to be our advice to them. But is this really the best idea ever? Their Boost Mobile in-house MVNO is offering unlimited US-wide voice service for $50 a month, which is half the price of the unlimited plan that Sprint mainline (as the airlines would say) offers. Launching a price war is one thing; launching a price war against yourself is quite another.
So, as they say, where is the hope? There is apparently a change of government going on in the United States (did anyone hear what happened?) and telecoms interests are as always keen to get in the new guy's inbox. The Telco USSR was right there; they're angling for a $2 billion slug of subsidy to build a "first responder network" for the emergency services. The killer detail; they want to use their existing iDEN network, which does indeed have various useful capabilities in that line...so what's the $2bn for then?
In the current version of the new administration's economic crisis plan, there's some $6bn going for "broadband" - those with experience of the industry in the US will be thoroughly familiar with the way taxpayers' money intended for fibre deployment vanishes once it gets inside an RBOC, so the community fibre guys are desperate to get their hands on it. The transition team is playing it down as much as they can.
At the same time, Obama is holding fire on the analogue TV shutdown, which creates a knock-on effect for the operators who bought the 700MHz spectrum that will become available as a result, and also pushes off hopes to get some of the spectrum for the last mile of rural broadband projects to a later date. Interestingly, Verizon Wireless seems to be looking at moving up the deployment of LTE to the end of this year, which is also conditional on the availability of 700MHz spectrum.
Which may have something to do with Infineon's announcement of LTE silicon this week, including full compatibility all the way back to GSM voice only.
After all, there's still plenty of activity down there - Etisalat just grabbed the third Iranian GSM licence, setting up a bruising contest with emerging market specialists MTN's Irancell, and Batelco jumped into the Indian mobile business. Rwandatel has had to go back to Huawei for more handsets after they sold out, Indian operators are discovering the delights of sharing, and Latvia starts a fibre-to-the-home deployment.