Telco 2.0 News Review: Post-MWC News Binge
- Strategy & Finance: Comcast-Netflix peering deal; FCC points 706 at neutrality; Telefonica Digital is no more
- Voice & Messaging 2.0: FaceApp Whatsbook - $19bn worth, really, even with voice? Tropo rolls out with Huawei, China Telecom
- Technology Disruptions: Software-defined networks dominate vendors' MWC; AT&T taps Tail-F & Metaswitch
- Privacy & Security: MWC paranoia; Blackphone, Boeing, Samsung security devices, OpenID
- Smartphone Roundup: Gadget watch: Galaxy S5, Nokia Androids, BlackBerry, Firefox OS, Ubuntu, YotaPhone
- Mobile Broadband: US LTE slowing down, or filling up? China adds 750k eNodeBs this year; small cells; Project Spring goes to Ericsson
- Fixed Broadband: OFCOM tries to speed Hyperoptic deployment; UK.gov finds another £250m for rural, hopes it won't get magic beans again
- Digital Commerce: EE unwires Wembley; iPads in banks; Comcast ads, Bitcoin disaster
Comcast-Netflix peering deal; FCC points Section 706 at neutrality; Telefonica Digital is no more
Before we dive into the Mobile World Congress news pile, there was serious regulatory action and important news on the Comcast-Netflix dispute last week. After weeks of arguing, the giant cableco and the monster video-cannon signed a peering agreement under which they will set up direct interconnection between their networks in exchange for a side-payment from Netflix. Cue much shouting about net neutrality.
In a must-read post, CDN expert Dan Rayburn provides a detailed explanation of the dispute and the detail, with financials and insight into the technology.
The shorter version is that, yes, it's fundamentally an Internet peering war, and as with most of those, IP transit price-leader Cogent is involved. The telling detail is that Apple TV users aren't affected - unlike mainstream Netflix users, who are served by their home-grown CDN via Cogent, they are served by Limelight Networks via Level(3):
In a little known, but public fact, anyone who is on Comcast and using Apple TV to stream Netflix wasn't having quality problems. The reason for this is that Netflix is using Level 3 and Limelight to stream their content specifically to the Apple TV device..
Dan's list of peering disputes should probably also include the Free.fr/YouTube imbroglio from early 2013, as Cogent was involved in that too (see Telco 2.0 news for January 2013). It's also true that there's nothing secret about Comcast paid peering: they advertise it on their Web site.
Meanwhile, something similar may be happening with regard to Verizon. Netflix's deployment of additional HD content may have been a triggering factor here, driving up the traffic levels crossing Cogent's network bound for the eyeball ISPs. That said, we've also heard it said that Verizon, especially, should pay Netflix for encouraging its customers to sign up for higher FiOS service tiers...
The VZW deal has closed, and Verizon reckons it will increasing earnings per share about 10%.
The FCC, meanwhile, says it intends to pursue net neutrality using its new Section 706 powers and also keep Title II reclassification "on the table". There will be a public consultation on the issue. Of course, the FCC isn't the only regulator in the US. The Justice Department anti-trust division is not happy about consolidation in TV, and it is putting pressure on the FCC to do something about it. All in all, it sounds likely that the FCC will impose conditions on the Comcast-Time Warner Cable deal - you can read more about that here.
Fared Alib, Sprint's SVP of product development and operations, is quitting. T-Mobile USA announced revenues up 39% year on year and a loss of $20m for Q4. Telecom Italia denies that it's going to sell TIM Brasil.
Whatever they eventually decide, Latin American telecoms is going to look a little different in future. During MWC, Telefonica announced a major reorganisation that closes down the Telefonica Digital innovations operation in London, and that also gets rid of the two regional HQs, that is to say the old O2 Europe and Telefonica Latinoamerica in Sao Paulo. In the future, everything will report directly to Madrid, as in the age of Philip II's galleons on the Spanish Main...or something.
The official explanation for all this is that they're:
Strengthening our leadership in the digital ecosystem, by driving a new public positioning enabling the hypersector to re-establish balance in the value chain
A simpler one is that Europe chief and M&A boss Eva Castillo has fallen out of favour, losing her operational responsibilities in favour of a new and vague post as "advisor to the president", and TEF's politics are adjusting to this new reality.
FaceApp Whatsbook - $19bn worth, really, even with voice? Tropo rolls out with Huawei, China Telecom
So Facebook's bought WhatsApp, for a mere $19bn. The number should be qualified by the fact that it's mostly stock, and $3bn is deferred stock at that - only $4bn in cash is changing hands - but either way it's a lot of money for a company with 55 employees and "nominal" revenues. That $4bn is 35% of Facebook's cash on hand. Dan York makes the bull case, arguing that this represents Facebook acquiring a bigger share of hundreds of millions of users' social media usage, and that it represents a major threat to telcos' SMS revenues, as if we needed another.
That said, it's not as if Facebook is likely to capture revenue from the operators so much as destroy it by driving SMS pricing down towards zero. A lot of operators already bundle SMS, and the next price-disruption target is probably international (I paid 8.1p/text or 37p/MMS in Barcelona, for example, which is why I used Google Hangouts as much as possible).
Danah Boyd sums up the bear case, which is quite simply that it's too much money for any conceivable monetisation. Also, WhatsApp's USP is that it's a pure IM app with ultra-minimal look and feel, no advertising, and robust privacy - pretty much the anti-Facebook. How can they possibly integrate? And did you notice that one major VC fund, Sequoia Capital, is a major shareholder in both companies and stands to make $3.4bn on the deal?
Another justification is "data", but the problem here is that if ads linked to what you discussed on IM start following you around the Web, you might just ditch WhatsApp. Because it uses phone numbers as user IDs, your address book can follow you to another app very easily, and in fact we're seeing this happening: encrypted messaging apps Threema and Telegram have both reported a huge surge in signups. Rather like all those people who moved from Instagram to Flickr last year after Facebook bought it.
Facebook CEO Mark Zuckerberg used his MWC keynote to defend the deal - he said it was going to be a huge business although he didn't really say why - and to spruik his Internet.org initiative to get free "basic service" into developing countries. This is controversial with the mobile operators because another way of saying "free basic service" is "operators subsidise it". As well as things like Wikipedia, weather, and agricultural prices (remember Nokia Life Tools?), the basic service apparently includes...Facebook, so you can see why a certain scepticism as to the Zuck's motives might prevail.
WhatsApp did have something up its sleeve, though: it's going to start providing voice. Nice, although the point about destroying rather than capturing revenue is very much true about voice as well.
There was quite a bit of voice news at MWC. AT&T's network chief Kris Rinne has 'fessed up that the launch of VoLTE is sliding right again. In 2010, it was meant to go live in 2013; in 2013, it was meant to launch this year. This year, well, they aren't giving a date.
Tropo, the original voice developer company, has a major new deployment and a major new partner. We mean it; the partner is Huawei and the deployment is China Telecom.
Sprint is offering voice over WLAN, using Kineto Wireless's technology. The choice of Kineto suggests they're planning to integrate the new service in a VoLTE core network. The main objective is to fill in blackspots and improve in-building coverage, but they're also beginning to roll out HD voice and selling Harman-Kardon fancy speakers, which they're interestingly framing as part of an overall audio strategy.
This post on NoJitter makes a strong argument for the value of audio. At MWC, we saw Joe Barton of Plantronics making a similar argument - "video is just video, but better audio can make you feel like you're really there" - and some impressive technology from Fraunhofer and Qualcomm among others.
Acision announced Fuze, a new client application for real-time comms that isn't necessarily bound to RCS. Orange R&D's Libon has a new feature, which is interoperability - rather, if you message someone who isn't a user, they get a link to a Web page which contains the HTML5 client for the service. A quote of note:
"I would argue that we're out in front of the telco OTTs," Giles told me. Although it's compatible with Joyn (the 'advanced' telco messaging standard) Libon is in no way tied to Orange. "It's open to any carrier who wants to use it," Giles tells me.
NoJitter reports on the use cases that are being included in the WebRTC standard, which is up for discussion on Tuesday at the London IETF meeting. (And we're going!) Chris Kranky, meanwhile, outlines some of the problems the technology faces, notably carrier-level NAT and port-blocking - a specific Internet-draft on this will be discussed on Tuesday.
A terse code review message announces an important step - the Chrome web browser now supports WebRTC in webview mode, so HTML5 apps (or any app that wants to display a web page) can embed WebRTC functions.
Here's an argument that WebRTC developers should rely on the cloud for signalling rather than trying to develop their own protocols. A list of systems that support the Opus audio codec. Skype CEO Tony Bates exits Microsoft.
Software-defined networks dominate vendors' MWC; AT&T taps Tail-F & Metaswitch
A huge MWC theme was software and virtualisation. Whether you call it SDN or NFV, there was a lot of it about. And it seems to be moving into an implementation phase. AT&T is redesigning its core network to make use of the technology, and it's tapped a range of new vendors as suppliers. Metaswitch Networks, Tail-F Systems, and Affirmed Networks are the lucky winners in the first round.
Alcatel-Lucent claims to have 20 trials of its CloudBand products, mostly EPC.
Cisco announced its Evolved Services Platform, which has two application modules at launch, a cloud-based DVR and a sponsored-data solution. This is only the tiniest element of their commitment to SDN, though. In CEO John Chambers' keynote at MWC, he specifically named Deutsche Telekom as having the best architecture with their Terastream SDN initiative.
DTAG is building its system on the OpenStack platform, and so is Kontron, which has among other things a virtualised M2M solution for telcos.
Telefonica is planning a major virtualised network rollout, called Unica. It should go live this year and cover 30% of their services by 2016:
Here's a good rumour: Nokia to buy Juniper Networks and get some deeper IP routing knowledge?
Ericsson, of course, did just that with Redback a few years ago. There were also NFV announcements from Intel, Dell, and HP. And NEC demonstrated a virtualised MVNO platform, aka a virtual mobile virtual network operator.
MWC paranoia; Blackphone, Boeing, Samsung security devices, OpenID
Another theme at MWC was security, or paranoia. The show was bookended by the discovery that Apple iOS's SSL support just doesn't check SSL certificates at all and the disclosure that GCHQ was in the habit of intercepting Yahoo! video chat just in order to experiment with face detection algorithms, and 11 per cent of the streams contained what the spooks rather ungallantly called "undesirable nudity".
As a response to this, security-optimised smartphones are proliferating. Blackphone is the icon of this trend, what with Phil "PGP" Zimmermann being involved and the gadget coming with a completely new fork of Android. With it, you get strong encryption for your storage, minimised OS logging, secure clients for voice and messaging, and a VPN for your data traffic, plus a two-year support contract. KPN will be offering it in Germany, Holland, and Belgium.
But the enterprise folk aren't idle. Of all companies, Boeing is now producing a smartphone, the Boeing Black, a security-optimised Android device.
Samsung already has its Knox solution, which encrypts the data on your phone and provides for remote device management to wipe it if it goes missing, but the Snowden disclosures demonstrate that this is far from sufficient - you need to worry about the network as well. As a result, they showed a new client that provides encrypted voice, instant messaging, and file transfers. Unfortunately they also left the two Galaxy Note 3s used for the demo just lying around, switched on, with SIMs, unprotected by passwords or keyguards, where we found them:
Secure. It's a good job we're the good guys.
The OpenID foundation, along with a line-up of major Web 2.0 companies, announced the latest version of their protocol at MWC, including a special extension for mobile two-factor authentication.
The Columbia Journalism Review rounds up harder alternatives to Skype for journalists who need to talk to their sources.
Brian Krebs reports that there is a special problem associated with the Target credit card breach: so many cards are affected that the card industry can't make them fast enough to replace them quickly.
Lauren Weinstein is not happy about a proposal in the HTTP 2.0 standardisation to let "trusted" parties read SSL connections so as to do network optimisation. We were at the IETF89 privacy workshop on Sunday and this is about as far from "rough consensus" as it's possible to get (let alone "running code").
Bruce Schneier blogs three NSA spying projects: one, two, three. The first seems to include a neat integrated small cell/network in a box solution. He also links to a new denial of service attack on the HLR.
And here's a visit to the DNS root key-signing ceremony.
Gadget watch: Galaxy S5, Nokia Androids, BlackBerry, Firefox OS, Ubuntu, YotaPhone
It wouldn't be MWC without shiny gadgets. Samsung launched the Galaxy S5 and Sony the Xperia X2. If the brands gave you the impression that this was mostly about incremental improvement, you'd be right. Some would even say they were a bit dull.
However, there was some device news that was very far from dull: Nokia announced two rather impressive Android-based phones, the Nokia X and X1. The phones are intended for the entry-level smartphone market. Nokia is using the base AOSP package, plus its own look-and-feel, and replacing the Google apps with its own package (so Bing search, HERE mapping etc). Because the apps are Google's control point in Android, there's nothing Google can do about it - although you wonder what the Windows Phone group within Microsoft thinks.
Nokia also had a guy dressed up as a zombie shambling around their stand; a brave choice in their position.
BlackBerry played up the security theme, announced the new BlackBerry Enterprise Server, suggested it might launch vertical-specific phones, and announced a couple of new shinies. CEO John Chen is now hoping to break-even this year.
The BlackBerry division that owns the QNX OS could offer some good news - Ford has dropped Microsoft in favour of QNX for its connected car projects.
Here's an interesting suggestion: BlackBerry should sell the Q10 keyboard as a peripheral for iPhones.
Mozilla's Firefox OS is rolling out with more phones. To some extent this reflects them turning away from the low-end of the market, but to some extent it represents the fact that the low end is disappearing as smartphones get cheaper. Some of the Firefox OS devices now come with a mid-range Qualcomm Snapdragon chip, i.e. the absolute state of the art 18 months ago or thereabouts.
The Galaxy S5 is built on the Snapdragon 801, which gives it more speed but more importantly, better hardware acceleration for imaging and an LTE baseband integrated in the SoC for better battery life. We'll probably also see some of them with the latest of Samsung's own Exynos chips.
Jolla showed off the Other Half hardware extensions, and promised a universal installer app for its Sailfish OS later this year; Ubuntu showed two phones produced by a Chinese OEM. But the most interesting gadget was probably the new YotaPhone, which is covered on the whole of one side with an ultra-low power e-ink screen for e-books, text, homescreen notifications, and the like. On the other side there's a more conventional touchscreen for high-visual applications.
Low-power displays might be a good tip for 2014; there are a lot of wearable devices with very constrained battery space and size around, and of course the best way to get better battery life in general is to reduce the power draw. Qualcomm's Mirrorcell technology looks cool.
Far from MWC, Apple announced CarPlay, the equivalent of AirPlay in the connected car. It uses Siri for the voice-based interface, Apple Maps (so watch out), and either iTunes, Spotify, iHeart Radio, or some other app for music. Ferrari, Mercedes-Benz, and Volvo have already integrated it in cars and 13 other manufacturers are interested.
US LTE slowing down, or filling up? China adds 750k eNodeBs this year; small cells; Project Spring goes to Ericsson
Is the US slowing down? OpenSignal, the project to crowdsource network data, shows a startling decline in observed speeds on US LTE networks. The average was 6.5Mbps, down from 9.6 the year before. The world leader was Australia at 24.5Mbps. The best performing network in the US was T-Mobile at 11Mbps.
The fact that the best performing network was also the one with the least coverage points strongly to a possible explanation: the easiest cells are deployed first, and the earlier it is in the network's life, the fewer users are contending for bandwidth.
China, meanwhile, is deploying 4G at a ferocious rate. It already accounts for 60% of the market for LTE infrastructure, and a second wave of China Mobile contracts is expected later this year, ordering as many as 500,000 eNodeBs. Add to that 250,000 for China Telecom, and you can see how ZTE finance director Wei Zaisheng reckons China will have a million of them by the end of the year. The GSMA reckons they'll have 900 million users by 2020.
The first network to really plunge on LTE was Verizon Wireless, of course. Not long ago, 70% of all LTE CAPEX was in the US. (Noticed how Europe doesn't really come into this?) VZW spoke to a major trend at MWC, signing up Samsung to provide its LTE small cells. This is the first time that they sell VZW infrastructure as opposed to gadgets. Meanwhile, TIM Brasil is buying Alcatel-Lucent small cells to add more 3G before the World Cup.
The Small Cells Forum announced its Release 3, which deals with the deployment of small cells in the urban context. Cloudberry, meanwhile, offers a solution for multi-operator hosting of "small cells as a service".
Bouygues says it's deploying LTE-Advanced this year. All sorts of people are claiming this; the vendors are all very keen to announce amazing theoretical maximum speeds for their carrier aggregation features. We notice that increasingly, carrier aggregation includes pulling unlicensed spectrum into the cellular network.
It looks like most of the £7bn Vodafone CAPEX under "Project Spring" will end up at Ericsson.
And it looks like OpenBTS is getting productised.
OFCOM tries to speed Hyperoptic deployment; UK.gov finds another £250m for rural broadband, hopes it won't lose it again
OFCOM is keen to get Hyperoptic the code powers it needs to lay more of its gigabit fibre around the UK. The change makes it easier for them to get permission to dig up the road.
BT, meanwhile, claims that OFCOM makes it sell partially and wholly unbundled lines at different prices, which harms "smaller ISPs", apparently. This interest in smaller ISPs is new. Perhaps it's in the same way that RevK is accused of "bullying" BT?
The UK government is about to release another £250 million for rural broadband, and Broken Telephone points to a meeting of local communities to discuss how to get better value from it. It seems that even central government is now a little worried about BT getting literally all the money all the time.
No wonder, really. Remember the NHS National Programme for IT? You might be surprised by the next item. BT has earned another £1.3bn in fees on it despite the fact that it's been cancelled.
It's no better in Scotland, either.
And frustration boils over for an Aussie NBN advocate.
EE unwires Wembley; iPads in banks; Comcast ads, Bitcoin disaster
EverythingEverywhere is Wembley Stadium's official mobile network partner for the next six years. This includes branding, obviously, but also things like digital signage, apps, WiFi, and possibly also LTE Broadcast infrastructure. Increasingly, big retail sites and stadia are turning into environments elaborately wired with mobile infrastructure.
BT's blog discusses how banks use iPads in their branches - Barclays does well, NatWest and Halifax much worse.
Comcast acquires an ad platform for $320m.
And the main Bitcoin exchange, Mt Gox, has gone bust, after a fraud worth some $350m or 5% of the total stock of bitcoin in circulation was discovered.