BRICs, Free Mobile, 600MHz, Gaming as Content, Smart Meters "Dead" - Telco 2.0 News Review

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Focus on BRICs: adding $17bn of revenue through "more coverage"; regulators vs. Telefonica; TIM/Telebras fibre swap; tower-sharing coming, Chinese 4G licences

How can Brazilian operators add $17bn of new revenue? Apparently, increasing their coverage footprint and capacity, according to a survey of Brazilian subscribers. 56% of them reported being out of coverage at least three times in the last month, and 40% would pay at least R$5 a month extra for better basic service. The regulator, Anatel, is probably the most effective in Latin America, but John Strand of Strand Consult fame thinks it's their fault for "blaming the operators".

The bigger question, though, is "what's going to happen to TIM Brasil?"

Telecom Italia is selling more of its own shares to Telefonica, in an effort to pay down its debts without parting with the valuable Brazilian operation. Telefonica is already present in Brazil as Vivo, so the Brazilians see this as an effort to merge the two operators without admitting it. Rather than Anatel, the relevant regulator is Cade, the anti-trust agency. This week, it fined Telefonica $6m and demanded that they either relinquish the stake in TI or find a strategic partner for Vivo.

A solution has been suggested - break up TIM Brasil and sell the bits to the three existing players. But Anatel may not wear this, as it means going down from four to three operators. As an additional complication, a substantial shareholder in Telecom Italia, Marco Fossati, is threatening to launch a boardroom coup if TIM Brasil is sold.

TIM Brasil, meanwhile, swapped 2,200 kilometres of fibre with the state-owned backbone operator, Telebras, as part of the national broadband plan. TIM Brasil is also planning to invest $4.7bn in more fibre over the next 2 years.

Oi, meanwhile, has sold off 2,000 towers to a US investor. The average occupancy of the towers is currently 1.6, so expect a major effort to increase tower-sharing.

In other emerging markets news, the Chinese 4G rollout gets closer still, as the TD-LTE licenses are distributed. China Telecom and China Unicom get 40MHz of spectrum each, while China Mobile gets 130MHz, split across the 1.9, 2.3, and 2.6GHz bands.

Last week we heard about BlackBerry's new strategy based on emerging markets and software, so here's Businessweek's oral history of the company.

In Russia, meanwhile, Vimpelcom has signed up a deal with WhatsApp to ship the app on their phones. This comes after last week's announcement with the Nokia Asha 501.

French carriers taunt Free Mobile over LTE - guess what happened next; Republic Wireless reviewed; Ultra slashes US international prices; SCF Release 2

France's incument carriers have been boasting about their LTE networks and how long it's taking for Free Mobile to deploy 4G. This may have been a mistake, because the obvious has now happened. Free announced that LTE is now available on their standard €19.99/mo tariff, with a 20GB (!) data allowance. That's €10 a month cheaper than Bouygues' cheapest, which comes with one-seventh the data.

The kicker is that Orange was hoping to increase its prices on 4G by as much as €10/mo. They're putting a brave face on it, claiming that Free doesn't have the coverage - presumably because that worked so well last time. There's a small mystery here: ARCEP counts Free as having 700 base stations "capable of 4G", and SFR as having 718, while Orange has 3,500 and Bouygues a mammoth 4,665.

You wonder if two different things are being counted here. The whole of Free Mobile's macro network, after all, consists of Nokia base stations that are sold as being software-upgradeable to 4G, so are Free and SFR counting the sites where they've turned on the service, while the others count every site that could potentially be upgraded?

The Android Police review Republic Wireless and the Moto X smartphone, and come away well pleased. Republic is another of the wave of MVNO-plus-WiFi players emerging in the US - in this case you pay $299 for the phone, which is sharp pricing in itself, and $5/month for their VoIP service over WiFi, plus between $5 and $35/mo for additional mobile voice and data they wholesale from Sprint. A key issue with these products is the integration of the alternative dialler with the phone - the Android Police were pleasantly surprised, and pleased that the cellular-WiFi handoff worked.

Republic has also made a major innovation in the art of bundling - they've defined "unlimited" to mean "5GB". Not that $35/mo for 5GB of LTE isn't fairly keen pricing by US standards, but it is sort of limited isn't it?

More threats to US pricing are lining up. This time, it's international they're after, with Ultra Mobile offering 1,000 minutes of international voice for $19/mo. They're an MVNO running on T-Mobile USA.

Like WLAN, small cells are an important enabling technology for disruptive carriers. The Small Cells Forum has published its Release 2, concentrating on enterprise deployments. Alcatel-Lucent, meanwhile, wants to host multiple operators' small cells and is actively signing up businesses who own potential sites, while fending off demands from the French government to bring more of its manufacturing back to France.

Meet CUSAX, aka RFC 7081, or Concurrent Use of SIP and XMPP, an Internet standard that aims to combine everyone's favourite VoIP standards and use XMPP for messaging and metadata and SIP for voice and video.

Verizon Wireless, meanwhile, has quietly admitted that VoLTE won't be launching this year.

Verizon, T-Mo crack open more spectrum; action on 600MHz; Wheeler promises "net neutrality" and "two-sided markets"

The VoLTE may be sliding right, but Verizon has acquired CDN Edgecast for some $350 million. That brings them some special software and 6,000 clients, including Twitter and Pinterest among other social media majors.

As we point out in the new Telco 2.0 Transformation Index, Verizon has a distinct lead over its rivals in the core disciplines of fixed and mobile broadband. This week, they began using the 2.3GHz AWS spectrum for LTE in most of their markets east of the Missisippi. So far, only a few of their smartphones can make use of it, but those include the iPhone 5c and 5s, the Samsung Galaxy S4, and the top-of-the-range Motorolas. Software updates are planned for the others.

T-Mobile USA has started to align its own LTE spectrum with the bands it acquired with MetroPCS. This makes substantially more capacity available.

The FCC, meanwhile, gave some more details of the planned 600MHz auction. The process will start with a reverse auction in which the TV stations using the band at the moment will be offered progressively more money to give it up, and the spectrum gained will then be auctioned to the mobile operators. Not surprising, perhaps, that this rather complex plan is taking a while to come together and D-day won't be until the middle of 2015.

The new FCC Director, Tom Wheeler, has confused everyone by declaring his support for net neutrality and then immediately saying that there should be a "two-sided market" in which content providers could pay for priority delivery. Reactions were predictably prickly. After all, here's a compendium of customer complaints about US ISPs.

After T-Mobile introduced a pay-for-your-phone plan, AT&T followed suit.

In Canada, meanwhile, four bidders have given up on the 700MHz auction. They're essentially financial bidders, so that leaves a line-up of Canadian national and regional telcos. It's cold up there, as this photo shows:

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3UK goes for consolidation with 4G; O2 won't play ball on stolen phones; a whole £10m for "innovative" rural broadband

3UK is adopting a very different strategy with LTE to the other operators. It's not quite Free Mobile-style disruption, but it's certainly different. Whereas Vodafone and O2 have treated it as an upsell, and EE as a battering ram for market share, 3UK is concentrating on its existing subscriber base. Upgraders will get LTE for no additional cost. As a result, they're not spending money on extra handset subsidy (anyone who's been into a Carphone Warehouse lately will be aware that EE is handing out a lot of hardware). They're also ending roaming charges for customers going to the US.

All the UK's mobile operators have agreed to a credit-card style excess on customers' liability for fraudulent usage. From now on, if your phone disappears, you'll only be liable for the first £50. Unless you're a customer of O2 UK - they refused to sign.

Over in fixed, the UK market suddenly seems to be all about content. Having bought a ton of football, BT is now trying to outbid BSkyB for the rights to a previously untried electric car racing series. Good luck with that.

The British government is putting up a whole £10m for "innovative solutions" to rural broadband, after the near total failure of its policy so far.

In Australia, Minister of Broadband Malcolm Turnbull is asking the carriers if there's anything they want for Christmas, as part of a "Regulation Repeal Day". Meanwhile, Telecom NZ sold off AAPT, its Australian regional fibre arm.

EE and O2 go after gamers; Amazon Kindle Fire HD is a gaming hit; is music streaming economically dead?

Last week, we noted that the Softbank Samurai was investing in gaming companies because he thinks it's the most lucrative form of mobile content. This week, both EE and O2 UK are pushing it - EE has signed up WildTangent to ship all their games with the phones, funded by adverts and sponsored in-game goods, while O2 has a new tariff that gets you an Xbox Live, a Kinect, and a Nokia Lumia 1020, 12 months' worth of Xbox Live Gold, a copy of FIFA 14, and a whole 1GB of data, all for £100 up front and £52/mo.

This is a bit of a surprise: the Amazon Kindle Fire HD is the second-most popular mobile gaming platform, according to a survey, not too far behind the iPad.

ReadWriteWeb argues that streaming music is a disaster, littered by failures, that may just be a business model that doesn't work in the long run. Spotify doesn't make money, Rhapsody is cutting jobs, Turntable.fm is shutting down, and Pandora is trying to renegotiate its royalty terms to pay less. Artists are furious at how little they pay as it is.

The main reason to stay in the game is that music will get distributed, and there is no reason to think the traditional channels will reassert themselves, so the players have a chance of being the last man standing.

In the meantime, Spotify is trying to fix its rotten image with musicians, by promising much more money as the company grows and offering a new website to help promote their work, as well as partnerships to sell tickets and merchandise. The real problem is that however much Spotify grows is beside the point - it's how many of its free users it can convert into paying users, and failing that, what kind of cost-per-click it can gain from advertising.

Ad spending to soar, or plunge; exit Demand Media; signs of a surge in m-commerce; the fight for Japanese payments acceptance

ZenithOptimedia, the data-crunching bit of enormous French ad agency Publicis, thinks mobile advertising is going to push up spending on advertising generally, helping it grow at 5.8% a year by 2016. On the other hand, GroupM, which does the same sort of thing at WPP, has revised down its own forecast for the next two years.

A really steep recovery in a couple of years' time would reconcile the two. But then ,Deutsche Telekom is exiting the ads business, selling its classified ads operation Scout24. They're keeping a minority stake.

Demand Media is the company behind all those websites full of low-grade "tips" that make up the Google Top 10 for every query you can think of. Or at least it was. This quote is special:

Early on, Demand used eNom's 1 million generic domain names (such as "3d-blurayplayers-com") to serve up relevant ads to people searching for specific topics. These "domain parking" pages were immensely profitable, generating north of $100,000 per day, according to a former Demand exec who requested anonymity. "That's $35 million-$40 million per year without doing any work," the exec said.

But the tactic was fundamentally a bait-and-switch. Users landed on the pages expecting to find information on a subject and instead found an ad. To try to drive up traffic, Demand shifted its strategy, populating the sites with thematically related content. Counterintuitively, though, that decreased ad click-through, since people were reading the articles instead of the ads, according to the former executive.

Google tweaked the PageRank algorithm to filter them out of the results, and suddenly the "content farm" business wasn't what it used to be. Traffic is now down 56% this year and the company doesn't look long for this world. Is it significant that their biggest website, Livestrong, is dedicated to a man who was exposed as a spectacular cheat during the same period?

Even if it's hard to mourn Demand Media's ad-ridden domain parking pages, vacuous "help", and poverty rates, there's something vaguely worrying about the way Google just turned off the oxygen. Similarly, here's Jeff Bezos telling bookshops that "complaining is not a strategy". So that's what the drones are for.

The big pre-Christmas shopping days tend to come under intense scrutiny for what they show about our use of technology. Horace points out that one data series in particular, prepared by IBM, seems to suggest that people increasingly prefer to shop from mobile devices as opposed to PCs, and that phones rather than tablets are the key issue. This chart makes the point:

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That said, Flurry reckons that usage of shopping apps on the big retail days actually fell back from the levels it reached in 2012, but that may just mean it's a noisy data series.

It's also getting practically traditional that analysts draw huge conclusions from really odd data (mobile ad serving!) at this time of year, so take care. After all, the IBM data doesn't include Amazon.com or the iTunes Store.

Apple's iBeacon indoor positioning/advertising system has gone live in the US.

In Japan, Square and the Softbank Samurai have started a price war for credit card acceptance. Softbank is the Japanese partner for PayPal's smartphone card reader. Japanese credit card usage is remarkably low, probably because it's remarkably expensive for both consumers and merchants.

If you're interested in this, try our Digital Commerce briefing and then buy the Strategy Report

Is the UK's smart metering deployment, and associated M2M super-contract, dead?

Will energy prices kill Bitcoin? Interestingly, it looks like the only way to mine Bitcoins profitably is if you don't have to pay for the electricity - probably good news, or surely Amazon Web Services would own them all by now. It's been suggested that in the future, the criminal gangs who illegally tap electricity to light and heat indoor cannabis farms will fill their attics with servers instead.

Fascinatingly, Canadian utility BC Hydro told a conference that they were mostly deploying smart meters in order to catch people stealing power for just this purpose.

Smart metering is perhaps everyone's favourite M2M application - it's green, it's on a giant scale, and it might even be jolly. But we'd like to call your attention to Nick Hunn's Creative Connectivity M2M blog, which argues that the UK smart metering deployment is going to go badly wrong.

As well as smart metering, we often hear about projects that use the electricity network to run telecoms cabling in the same right of way. Here's a rare example of the opposite - Croatian telco T-HT is going to start supplying electricity. Hopefully it's not coming down the phone line.

Intel's NFV chip platform; how profitable is Amazon Web Services? Cloud Horror - it's Screaming as a Service

Highland Forest is Intel's new platform for network equipment, especially SDN and NFV applications. The announcement lays some stress on the special API for hardware acceleration of cryptographic calculations - you can tell the Snowden relevations are preoccupying quite a few people.

The Register does a nice introduction to NFV in the light of the Intel announcement here. They quote Don Clarke of BT as saying that the telco had decided to implement "a well-understood network function" with an HP server and Wind River's embedded Linux as an experiment. This would be more impressive if it wasn't for a whole string of similar BT projects we remember hearing about back as far as 2007.

Interestingly, the cable world's CableLabs standards organisation has joined the NFV group within ETSI. A couple of other points worth noting from that story - NSN wants to include a configurable blade server in its base stations, and they compare the structure of the voice network with a distributed CDN.

Here's an effort at estimating the financials of Amazon Web Services. They may be turning a profit at the EBITDA level.

This looks amusing: The Cloud Horror Archive, a collection of disasters with cloud services. It's fear as a service, or FaaS - you fill in the web form and specify just how scared you want to be...

ReadWriteWeb explains why so many major Web sites are using Joyent's node.js hosting - which you can get from Telefonica Digital, we recall.

Snowden: they're in World of Warcraft

The latest Snowden revelation is CO-TRAVELER, a major project to mine mobile network location data and find out who travels with who. You'll recall that the biggest single data source in the "Boundless Informant" slides is usually marked "PCS", and they seem to have a special interest in multinational mobile carriers and GRX providers.

It also turns out that the FBI have a trojan that activates webcams. And the NSA is infiltrating World of Warcraft.

The trustee of New York State's retirement fund, who speaks for a large quantity of AT&T shares, is trying to use them to make the company disclose details of the surveillance. AT&T is appealing to the regulators. He's also written to the locals at Verizon, but so far they've only said they're "evaluating" it.

On the other hand, a line-up of Silicon Valley firms have signed an open letter demanding reforms that would restrict the surveillance to "specific, known users for lawful purposes".

The difference between the telcos (and cablecos, although we've not heard much about them) and the Valley is shown up in this post from the EFF.