All the Q1s that are fit to blog: Telco 2.0 News Review
- Regulation: Busy week at the FCC: net neutrality rules, lobby wars, 600MHz, 2.5GHz
- US Carriers: AT&T Q1: a strong showing in wireless, action on fibre. Verizon Q1: let down by enterprise
- Global Carriers: China Mobile Q1; Pakistani 4G; Ericsson numbers; future no longer Orange
- Apple: Apple Q2 bursts the forecasts, the good way
- Cloud Computing: Amazon Q1s, Glacier technology, jobs; a new surge in data-centre scale
- Digital Commerce: Facebook's impressive Q1s; Google's rather tricky Q1s, exit Gundotra; Square wants out; Telefonica launches mobile ads exchange
- Online Music & Video: Netflix looks into P2P, to fix its peering; Spotify gets out of P2P, into Sprint
- Enterprise: Microsoft Q3s, LockedOut of LinkedIn, shadow IT, Salesforce support-as-a-service
- Voice 2.0: Better caller ID, perhaps not for the iPhone; building Truphone
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Busy week at the FCC: net neutrality rules, lobby wars, 600MHz, 2.5GHz
The FCC is going to propose revised net neutrality rules in May, and this has unsurprisingly touched off all kinds of controversy. Chairman Wheeler blogs about it here; the big issue is that the new draft Notice of Prospective Rulemaking bases itself on the notion of being "commercially reasonable". The key paragraph is as follows:
That ISPs may not act in a commercially unreasonable manner to harm the Internet, including favoring the traffic from an affiliated entity.
FCC critics argue that this begs the question - if the point is whether prioritisation is commercially reasonable, doesn't this accept the principle of an "Internet fast lane"? And what about non-affiliated entities like (for example) rival content providers?
Susan Crawford argues that the whole complex mess of regulations would be better replaced by a policy of supporting municipal fibre networks everywhere. Ars Technica points out that the FCC chairman is a lobbyist, and the lobby is chaired by a former FCC commissioner, while Verizon has been caught using strawmen to lobby in favour of an end to its commitment to build fibre across New Jersey.
AT&T, meanwhile, threatened to pull out of the 600MHz auction if the FCC insists on limiting spectrum holdings below 1GHz. Most of the long-range, high-penetration bands are held by either AT&T or Verizon Wireless, and the regulator would like to carve out at least 30MHz of the 600s for other operators, defined as those who control less than one-third of the sub-1GHz domain. Despite AT&T's threats, Wheeler sent the draft rules to the other commissioners.
May 15th will be an important day for Sprint, as the FCC will vote on whether or not to count a large 2.5GHz block as part of Sprint's holdings. If it gets counted in - which arguably it should do, as Sprint is now using it as an integral part of its network - Sprint will reach the one-third threshold in much of the States, and won't be allowed to acquire more spectrum.
But if it's regulation you want, try China: an official statement this week announced that "there can be no Internet freedom without Internet order". Obey tremblingly! as the emperors used to say.
AT&T Q1: a strong showing in wireless, action on fibre. Verizon Q1: good all round, let down by enterprise
AT&T's effort to menace the FCC sounds like the act of a company feeling its own strength. Q1 numbers were out this week, and they were strong: a million wireless net-adds and 7% annual growth in wireless service revenue. With OPEX up 6.6% in wireless, net income was up 8.1%. A caveat is that 40% of the gross adds were on the Next quick-upgrade plan, aka pushing hardware to fight the price war with T-Mobile.
Another, perhaps more serious, caveat was that wireline revenues were down, and expenses up, adding up to a 10.5% decline in wireline net-income at a time when the company's CAPEX is up 34% year-on-year. As a result, despite the powerful performance in wireless, group-wide net income was down 1.3%.
Verizon's Q1 was the next to drop in a heavy results week. VZW gained 539,000 net-adds, down 20% year-on-year and beaten distinctly by AT&T. (Although, the point here is probably more that the dynamic duo are still gaining subscribers from everyone else.) Wireless revenue, though, was up 7% year-on-year, which probably had something to do with them activating about 10 million LTE devices a quarter. 73% of their total data traffic is now on the LTE network.
Again, wireline was a very different picture. Wireline revenue was down 0.4% year-on-year - it might be more meaningful to say it was flat, as it was $9.8bn for each of the last three quarters. Within that, VZ's consumer revenue was up 6.2%, driven by FiOS Internet customers. The FTTH network now brings in $3bn revenue a quarter, in the context of $3.8bn of consumer wireline.
The problem was enterprise; Global Enterprise's revenues were down 4.4% year-on-year, and even "strategic services", aka "the good bits", only grew 1.8%. CFO Fran Shammo pointed to price pressure on the core voice and IP transit products, and cuts in public sector budgets (government is a big Verizon customer). That said, even if wireline could have been better, it was a better showing than AT&T's.
AT&T, perhaps feeling this, had a big announcement to make in wireline: after poking a toe into FTTH in Austin, it's making a start on a much bigger rollout, deploying to as many as 21 metropolitan areas.
The dynamic duo gained about a million and a half net subscribers, then. Where did they come from? We're waiting for T-Mobile and Sprint to report this week. Credit Suisse reckons it was another big quarter for T-Mo, with a million net adds or so. If true, that could only mean another horrible one for Sprint. That said, their estimate for AT&T missed by a mile.
T-Mobile has recently given us another round of price cuts, and this week they started adding extra LTE antennas to their base stations, moving from 2x2 MIMO to 4x2 MIMO in order to improve uplink speeds.
Sprint's numbers are due tomorrow and nobody is expecting much, except perhaps for CEO Dan Hesse, who turns out to be the industry's best-paid executive. FierceWireless collated the proxy filings, and it turns out Hesse trousered some $49 million in 2013, much of this in shares, in exchange for signing up for another four years. (To put it in context, Sprint expects to save $100m by shutting down the WiMAX network.)
Perhaps more understandably, John Legere at T-Mobile was number 2, with $29 million, while Lowell McAdam at Verizon was positively deprived on a mere $15.8 million. How does he manage?
Time-Warner Cable has deployed Hotspot 2.0 to its 33,000 WiFi locations. Charter, meanwhile, has agreed a succession of transactions with Comcast under which it takes over about 3.9 million net subscribers and swaps another 1.6 million, thus helping Comcast squeeze under regulatory limits in the TWC deal and also pay for it, as Charter will contribute about $22bn in cash, stock, and assets.
China Mobile Q1; Pakistani 4G; Ericsson numbers; UK, French broadband; Brazilian 700MHz; future no longer Orange
China Mobile's Q1 numbers show most of the industry's key trends in concise, concentrated form. Subscriber growth is topping out, but the adoption of mobile broadband is surging ahead. Data traffic is growing fast. And the usage of traditional voice and messaging is falling, which they blame on over-the-top competition. All in all, revenues were up a tad but net income was down almost 10%.
In Pakistan's spectrum auction, meanwhile, their opco Zong secured the only 4G licence. It has committed to investing $1bn in the rollout.
Ericsson, meanwhile, said that orders for 4G kit had dropped sharply in North America, Japan, and Korea, as the roll-outs were finished, but fortunately it has orders coming in from China Mobile and China Telecom. Although sales are down, net income was up 41% year-on-year, as the mix of orders included less initial roll-out work and more capacity upgrades. The company is also reorganising, creating two groups, one for radio and one for IP.
After all the excitement, Numericable tells its shareholders that revenues at its shiny new acquisition SFR are likely to fall until 2015 at least. Then, they hope, they will turn around thanks to 4G adoption and "less intense competition from Free". Some hope on the second of those, surely. Oh, and the SFR fixed subscribers on their FTTH network are going to be moved over to Numericable, in order to save on duct access charges. Just like Xavier Niel said.
In the UK, ISPReview looks into BT's Fibre on Demand product and why nobody seems to want it: the answer is that it's far too expensive, even from an enterprise point of view, and it may be that way to keep it from competing with BT's enterprise products. This will not cheer up the residents of Wheatley Road, Stanford-le-Hope, Essex, not exactly the edge of civilisation but still the UK's joint slowest street for Internet service.
Meanwhile, BT may be going to launch its 4G service to customers "towards the back of the year", while a wholesale product will land sometime in the summer.
America Movil Is close to winning control of Telekom Austria, under conditions set by the Austrian government that keep the company in town and engaged in central and eastern Europe.
Telecom Italia has both a board and a chairman again after six months.
The future's bright, but it is no longer orange. After 20 years, the industry's first iconic brand is no more in the UK, as EE decommissions the Orange name, colour, and websites.
Apple Q2 bursts the forecasts, the good way
Apple's Q2 was better than expected, with $10.2bn in profits, a margin of 39%, and good results in iTunes and in China. However, sales of iPads were 16 per cent lower than expected. Tim Cook is talking about enterprises a lot - Siemens apparently has 30,000 iPhones and 50 internal apps.
Horace points out that Apple's results have usually been within 1% of the top of the range they provide in their earnings guidance, but on this occasion, they blew right through it, beating their own forecast by 3.74%.
The explanation seems to be that the iPhone sold far better than expected, especially the cheaper models in China, and this was more than enough to make up for the bad iPad quarter. Apple has, of course, recently started shipping an 8GB iPhone 5c, aka a cheaper version of the cheap version.
Meanwhile, Apple has permitted a few journalists to look around their Maiden, North Carolina iDatacenter, mostly to show off the solar panels. The coverage is not what you'd call technical, with the exception that the system has enclosed hot aisles at 103 degrees F (specific!).
Amazon Q1s, Glacier technology, jobs; a new surge in data-centre scale
Amazon Q1s were delivered this week, with $19.75bn in revenue and net income of $108m. Interestingly, the bit of the company where AWS lives saw 60% revenue growth in the United States, compared with 11% in the rest of the world. It would be daring to attribute this to a Snowden effect, though, as the same line-item also includes advertising and credit cards.
A fascinating blog post, meanwhile, reverse-engineers their Glacier data archive product and concludes that the data is stored on Blu-ray disks in RAID-like cartridges.
Data Center Knowledge discusses AWS generally and provides a nice chart of how the increasing demand for engineers with AWS chops both tracks its growth, and also creates a competitive advantage for Amazon.
Meanwhile, there seems to be evidence that data centres are taking a step upward in scale, with three new projects all above 1 million square feet of space.
All very well - until, like Samsung's, it catches fire. Then you might wish you'd gone with something like this, an interesting alternative based on 100KW micro-colos.
Facebook's impressive Q1s; Google's rather tricky Q1s, exit Gundotra; Square wants out; Telefonica launches mobile ads exchange
Facebook Q1s are out, and they're pretty good. Revenue was up 72% at $2.5bn. 82% of that is ads, and 59% of that is mobile, up from 30% a year ago. And now, they want to be a mobile-money company: they're looking at getting an e-money licence in Ireland and they've signed up Azimo International as the technical partner.
It's harder than it looks, though: Square is considering selling up, struggling to make a turn in a notoriously low-margin business.
Google Q1s, meanwhile, were mixed. Revenues were up 19 per cent, and advertising volume was up 26%, but the average selling price of an ad was down 9%, as more of them were served to mobile devices. Google's Chief Business Officer, Nikesh Arora, says that he's convinced that mobile ads should be worth more, but he seems to be the only person. Except, perhaps, for Facebook? Also, if he's the Chief Business Officer, what are all the others doing?
If you're interested in these issues, check out our Digital Commerce 2.0 Strategy Report
Horace argues, very interestingly that Google's big problem is that its revenues basically follow Internet user base growth, and user base growth is basically over in the US and UK, where half its revenues come from. China is ruled out, so the problem is how to increase revenue from its activities outside the UK, US, or China. And there's no evidence of this happening. Ergo, Google needs to think about emerging-market advertisers. Internet balloons won't cut it - the user bases are growing strongly, but the revenues aren't.
Meanwhile, Google+ boss Vic Gundotra is quitting, and the company is apparently thinking again about its very unpopular policy of integrating all its accounts with G+.
Telefonica is launching a mobile ads exchange, based on the assets of MobClix, an ad exchange that went bust last year.
Alibaba.com is launching a new mobile search engine.
So many digital commerce plays seem to involve Bluetooth Low Energy these days. Fortunately, here's the 3G & 4G & 5G Wireless Blog with your technical briefing.
Netflix looks into P2P, to fix its peering; Spotify gets out of P2P, into Sprint; Hulu: no VPN
Netflix is hiring, looking for an engineer with expertise in large-scale P2P streaming networks. Not surprisingly, this is being taken to mean that they would like to deliver video that way. Interestingly, their CEO has suggested that if Netflix was to become a balanced peer, with roughly equal outbound and inbound traffic, they might have a stronger case for settlement-free peering with major carriers.
On the other hand, Spotify is stripping out the P2P element from its apps, in order to rely entirely on a client-server Web architecture. In 2011, 80% of its traffic was served from the P2P cloud, making it one of the Internet's biggest P2P networks by volume.
Sprint may be looking for a content partnership with Spotify, bundling the service with some of their plans.
Hulu, meanwhile, is blocking well-known VPN hosts' IP ranges, having realised that a lot of non-US viewers sneak in because it's cheap.
Microsoft Q3s, LockedOut of LinkedIn, shadow IT, Salesforce support-as-a-service
Microsoft Q3s were very reasonable, with revenue up 8%. The stand-out detail was Office 365: MS added a million net 365 Home subscribers, and its O365 and Azure cloud operations had sales up 31% year-on-year.
LinkedIn has imposed a new developer agreement that basically locks out companies it doesn't like from its API. As a result, Zoho has walked away from integration with the site. As the official partners are Microsoft and Salesforce, though, you might think LinkedIn will take this rejection fairly well. That said, it does leave Oracle and SAP out in the cold.
Shadow IT, the stuff your developers use without telling anyone.
Here's something interesting: everyone oohed over Amazon's Mayday built-in tech support helpline. Now Salesforce is offering something similar for the enterprise, and any developer working with their API can integrate it. Obviously you have to arrange for someone to actually answer the calls and offer help, but it's pretty impressive. We wonder if it's a WebRTC application.
Better caller ID, perhaps not for the iPhone; building Truphone
Truecaller is a better caller ID app. Just look at the trouble they had to go to in order to look up phone numbers as they come in on the iPhone!
When you receive a phone call from a number you don't recognize, you simply take a screenshot of the call
Simwood deploys its own WebRTC-based conferencing.
Here's a good interview with James Tagg of Truphone. Interesting detail: they're selling the service on the basis of roaming data speeds, benefiting from the absence of trombone routing.
Secret is an app that lets you comment on your friends anonymously.
EE's voicemail was desperately insecure for quite some time.
Some fascinating projects in the Vodafone Foundation's competition for disaster apps.