Hesse out at Sprint; DTAG Q2; Brazil; Amazon - Telco 2.0 News Review
- US Carriers: Sprint walks away from T-Mo, leaves Dan Hesse; US revenue slides; Satellite Cowboy rides again
- Europe: DTAG cooling on T-Sale after all? PTel lost €893m in bust bank; 40% of VMED net adds > 100Mbps
- BRICs: Telefonica wants to swap TI for GVT, TI wants GVT, China Unicom H1, MTN goes all in on Syria
- Content 2.0: Cloud vs. Mouse: Amazon in fight with Hachette, takes on Disney as well; Netflix UK doubles footprint
- Silicon Valley Roundup: Valley roundup: forkdroids everywhere, cheap iPhones, YotaPhone leaves Russia
- Voice 2.0: VodaVoLTE; when WebRTC platforms fail; is decentralisation just too much hassle?
- Security & Privacy: Google rewards HTTPS deployment; Chinese censorship extends further
- M2M: OneM2M standard is out; get our view on Google-Nest now
'Digital Asia 2014' Executive Brainstorm and Innovation Forum, run by STL Partners in collaboration with Telkom Indonesia, is designed to equip 250 specially-invited business leaders from across the region's telecoms, enterprise and technology sectors with new, breakthrough ideas, methods and tools on how to grow significant new revenues in the next 12-18 months leveraging Mobile, Cloud and Big Data.
Sprint walks away from T-Mo, leaves Dan Hesse behind; US service revenue slides; Satellite Cowboy rides again
If last week's surprise was the Free.fr bid for T-Mobile, this week's was surely the news that Sprint is walking away from the deal, and incidentally sacking Dan Hesse, the industry's highest-earning CEO. Marcelo Claure, from Softbank's distribution wing, Brightstar, takes over and is expected to slash prices.
Clearly, the price war is about to move into a new phase, which will only make the Free-T's deal's hyper-leverage more risky. John Legere of T-Mobile says they've passed Sprint for pre-paid and hope to pass them for total subscribers later this year.
No surprise, then, that Chetan Sharma reckons that US wireless service revenue fell 2% this year. 55% of the total is data, of which 68% belongs to the dynamic duopoly. Interestingly, he also reckons that the number of companies who make at least $250m a quarter from mobile is up sharply, almost entirely because of apps and adjacent players.
That isn't cooling the deal fever, though. The Satellite Cowboy Charlie Ergen rides again, threatening to leap in with a bid for T-Mo, or perhaps to join a Free-led bid. DISH would add more cash and especially more spectrum to the mix.
Watch this space for in-depth Telco 2.0 coverage of the Free-T-Mobile bid
After Verizon Wireless began restricting speeds for subscribers who have managed to keep their old unlimited-data plans, Public Knowledge filed complaints under the Open Internet Order against all the US national carriers. It's going to be interesting to see how the process works, which may be their real aim.
The FCC, meanwhile, has put the kibosh on the idea that Sprint and T-Mobile might bid jointly for 600MHz spectrum without actually merging. And Centurylink, quietly, is beginning to roll out 1Gbps fibre to selected customers.
DTAG results - are they cooling on T-Sale after all? PTel CEO steps down over €893m loss in bust bank; 40% of VMED net adds > 100Mbps
Speaking of T-Mobile, DTAG's Q2 results are out. The right word is "mixed"; groupwide earnings were up 34% at €711m, but all earnings numbers for Q2 at T-Mo USA or DTAG are heavily affected by a one-off spectrum swap with Verizon which created a $747m non-cash gain, although it drew down T-Mobile's cash by $2.3bn. Looking through the spectrum deal, it looks like T-Mobile USA swung from a net loss in Q1 to about a $240m net profit, essentially because the loss on equipment sales narrowed (i.e. they didn't give away quite so many iPhones).
Mobile revenues in Germany were down 2.3%, more worryingly. Earnings across Europe were up 1.7% on an "organic" basis excluding exchange rate movements, but then you can't pay your bills with "organic" money can you? On the audited basis, they were down 1.7%. In Q2, the carrier increased its capital investment in Germany by 58%, over a billion euros, on both more LTE capacity and more fibre-to-the-node, while overall, CAPEX was up 6.2% year-on-year.
CEO Timotheus Höttgens sounds like he may be going cool on the whole idea of selling T-Mobile USA:
"We do deals that create the greatest value," he said. "We close deals when the time is right. ... We do not allow them to dictate to us."
At Portugal Telecom, the CEO has resigned. In the News Review for the 8th of July, we reported that the two directors from Brazilian MNO Oi had quit the PT-Oi joint board over €893m of the corporate treasury that had been invested in something called Rioforte without their knowledge. Little did we then know that Rioforte would soon go down in the annals of fraud.
Controlled by Banco Espirito Santo, which also owned a large stake in PTel, it was one of the primary ways the bank's owners were using to pull cash into the institution that they then pulled out to feed their other businesses. Now, the bank is bust and the Portuguese taxpayer is on the hook, and PTel's €893m looks lost. As a result, PTel is having to revise the Oi merger and take only 25%, not 39%, of the Brazilian operator because it doesn't have the cash any more. Not so much Oi as oy vey.
Vimpelcom is also feeling the pain this week; net profits were off 83% after they refinanced the debts of their Italian unit, Wind, which they would like to sell. There are obvious problems selling an Italian MNO at the moment - Telecom Italia's results, on the 6th of August, showed its net profits for H1 down 7.6% year-on-year as the Italian economy triple-dipped.
In the UK, Virgin Media is expanding the footprint again, adding another 100,000 homes passed in east London. The most interesting detail here is that 15% of their net-adds are on the 152Mbps top tier and 40% on 100Mbps or faster - this fits with our Triple Play in the USA note's findings about high-speed broadband as a sales driver.
VMED has also unilaterally decided to count only 50Mbps and higher as "super-fast broadband" - the European Union uses 30Mbps as the benchmark, while the UK government has quietly trimmed to 24Mbps. Keen and agile minds will of course remember that good old ADSL2+ tops out at 24Mbps, so much of the UK can therefore be declared "super fast" with strategic use of the "up to" clause.
That said, neither Xavier Niel nor Stéphane Richard will want to remember this speed test.
Telefonica wants to swap TI for GVT, TI wants GVT, China Unicom H1, MTN goes all in on promising Syrian market
So Telefonica wants to buy GVT (Global Village Telecom), a Brazilian fixed operator, off Vivendi for some €6.7bn. Now, remember that Telefonica has a Brazilian GSM network, Vivo, and an indirect interest in TIM Brasil via its stake in Telecom Italia. The Brazilian regulators do not like this one little bit, and have threatened to force a breakup of Vivo if Telefonica doesn't get out of TIM Brasil or TI. What is Telefonica up to buying more Brazilian assets, then?
The answer is, in best Facebook style, "it's complicated". Telefonica intends to pay Vivendi, in part, in Telecom Italia stock. That would mean Telefonica would have to hand over the whole of their TI stake, thus solving the problem and making Telefonica a converged operator in Brazil via Vivo and GVT. Vivendi, though, is in the process of selling off its mobile and indeed telecoms interests worldwide (like SFR and Maroc Telecom), so why would it want TI shares?
But TI shares are what everyone concerned wants to press on Vivendi. Telecom Italia itself now wants to buy GVT off Vivendi, paying for it with its own stock and sweetening the deal by licencing Vivendi's content for distribution through TI's TV assets in Italy. That wouldn't solve the TIM Brasil issue, far from it, as Telefonica would then be part owner of TIM Brasil, GVT, and Vivo all at once, unless TI issued enough new shares to fund the deal that it diluted Telefonica very substantially, or the prospect scared them into selling up.
Meanwhile, the Brazilian government signed off six rural broadband projects based on LTE in the 450MHz band.
China Unicom's H1 profits are up 26%, on revenue up 3.6% year on year, chiefly because data revenue grew and (interestingly) interconnect costs fell quite dramatically.
And some operators don't let anything put them off. South Africa's MTN is trying to get its licence in Syria extended, partly in the hope of being able to access almost $250m in cash frozen in a Syrian bank, which put like that sounds like one of those dodgy e-mails. CEO Sfiso Mabengwa said:
"It would be a 20-year licence and I guess the reality is that the problems that they [Syrians] are having now would come to an end."
The problems being a vicious and apparently interminable civil war involving Hezbollah and ISIS, everyone's new favourite terrorist organisation.
Cloud vs. Mouse: Amazon in fight with Hachette, takes on Disney as well; Netflix UK doubles footprint in a year
Amazon's dispute with Hachette, over the pricing of e-books, isn't getting any better. They recently encouraged customers to write to the French publishing house, using talking points that misquote George Orwell (and misrepresent him even more).
That's amusing, but this is serious: Amazon has put pre-orders of some Disney movies on hold, in pursuit of another dispute. Surely nobody takes on Mickey Mouse and gets away with it?
Liberty Global doesn't expect to be held back from more acquisitions by its debts. If you can borrow $13bn to buy a carrier with as much debt as T-Mobile, we guess not...
Netflix, meanwhile, has doubled its subscriber base in the UK over the last year, and now reaches one household in 10, far ahead of Amazon's streaming service. The key element is distribution, of course; Netflix is now integrated on Virgin Media's STBs, and is expected to arrive on BT and TalkTalk's YouView boxes later this year. As Keith McMahon taught us, content is king but distribution is King Kong.
Here's something interesting: an enterprise-focused CDN, based on the idea that major CDNs tend to expire rarely-accessed items from the cache in favour of common ones (what else would you do?), so the YouTube or whatever edges out that odd enterprise app.
Silicon Valley roundup: forkdroids are everywhere, cheap iPhones, YotaPhone leaves Russia, structure of venture capital
Horace links to the news that the fastest-growing mobile OS is AOSP, i.e. the "forkdroid" indie versions of Android, and makes the good point that sticking with the main kernel and your own work helps to manage fragmentation as much as it causes it. And just look at those "others" go!
Here's a good discussion of the potential for a cheap iPhone. It would perhaps be worth 15% more gross profit to Apple, but the point would really be capturing more upgrades and hurting the Androidsphere. Also, sensible discussion of whether "featurephones" or the midrange are more at risk.
The YotaPhone crew are moving to Canada, apparently to hire ex-BlackBerry talent.
Interesting product, using WLAN and very dense MIMO antennas to provide a fibre-like backhaul product.
Do "app constellations" work and if so when?
And venture capital funds are getting smaller on average, but the median fund is getting bigger as the distribution gets more fat-tailed. It is argued that the scale needed to get a startup launched is much less, but the scale of funding needed to reach an IPO is much greater.
VodaVoLTE; when WebRTC platforms fail; is decentralisation just too much hassle?
Vodafone is rolling out VoLTE in the UK, and the main case their blog makes for it is improved battery life, although they do mention HD voice a bit.
Chris Kranky notes that a lot of WebRTC platforms have gone bust, merged, or dramatically altered course. This is not exactly what you want from a platform service provider, and he argues that if it's important to you, perhaps you should run the servers yourself.
Back when WebRTC began, everyone was hoping it would be a pure P2P technology and wouldn't need no stinkin' servers. Here's an interesting essay on the problems of building decentralised and P2P architectures, which ends up by postulating that there is a fundamental tradeoff between efficiency, security, and decentralisation. We thought it sounded like the CAP theorem and in fact the author eventually concluded the same thing.
Skype wants you to update. It wants it very badly, so much so that it refuses to work until you do so.
Google rewards HTTPS deployment; Chinese censorship extends further; O2, Vodafone vie for security clearance
Google is going to weight websites available over HTTPS more heavily in its search results, in an effort to encourage more of them to encrypt their content.
The Chinese government is extending its censorship to include instant-messaging, like WeChat, as well as social networks like QQ etc.
SIM-maker Gemalto has acquired another information security firm.
And both Vodafone and O2 UK are claiming to be double-extra secure. VF has claimed the Government's Cyber Essentials Plus certificate, while O2 UK claims the status of CESG Assured Service (Telecoms). The second is issued by CESG, i.e. the defensive arm of GCHQ. One up to O2 then.
OneM2M standard is out; get our view on Google-Nest now
Here's a new ambient-connectivity solution that harvests power from WLAN noise, enough to provide a narrowband link. Very narrowband - about 1kbps.
It seems difficult to get real competition in special-purpose and emergency radio networks. Here's a case study.
And finally, the Telco 2.0 executive briefing on Google, Nest Labs, and the connected home is out now.