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Software Defined Networking (SDN): A Potential 'Game Changer'


Software Defined Networking (SDN) is a technological approach to designing and managing networks that has the potential to increase operator agility, lower costs, and disrupt the vendor landscape. Its initial impact has been within leading-edge data centres, but it also has the potential to spread into many other network areas, including core public telecoms networks.

Our latest briefing analyses its potential benefits and use cases, outlines strategic scenarios and key action plans for telcos, summarises key vendor positions, and why it is so important for both the telco and vendor communities to adopt and exploit SDN capabilities now. We'll also be discussing SDN at the EMEA Brainstorm, 5-6 June in London. Email contact@telco2.net to find out more.

Potential Telco SDN/NFV Deployment Phases

telco2.net | 16-May-2013 12:27

Cloud, SDN: Disruptive Innovation & Supply Side Disintermediation


Cloud and Software Defined Networking (SDN - on which we're also about to publish a new report) are increasingly important topics that will be covered at the EMEA Brainstorm, 5-6th June, London. As part of our preparations, Telco 2.0 spoke to Alex Jinivizian, Head of Enterprise Strategy, Verizon, who's joining us to discuss some of the latest developments and opportunities in these areas. Alex told us he'd just posted a piece on disruptive innovation on the Verizon site - here's a teaser...

"Disruption is occurring on both the supply and demand side: the value chain is shifting, and new business models are emerging resulting in value creation, and value destruction..."

Worth a read - and why not also network and explore the issues with Alex, Telco 2.0 analysts, and other senior execs at the brainstorm? (Please email contact@telco2.net for more.)


telco2.net | 06-May-2013 13:17

Mobile Wallets: Time for a Rethink


The 'Mobile/Digital Wallet' needs to evolve to support authentication, search and discovery, as well as payments, vouchers, tickets and loyalty programmes. Moreover, consumers will want to be able to tailor the functionality of this "commerce assistant" or "commerce agent" to fit with their own interests and preferences.

This was a key finding of the Digital Commerce 2.0 Executive Brainstorm, 20 March 2013, part of the New Digital Economics Silicon Valley event - our full report and analysis can be found here. We'll be looking further at the practical actions needed to make M-Commerce a reality at the EMEA Brainstorm in London, 5th-6th June 2013. Please email contact@telco2.net or call +44 207 247 5003 for more.


telco2.net | 02-May-2013 08:36

Softbank-Dish Round 2: Smartphone Samurai vs Satellite Cowboy

Since we published our Sprint-Softbank: how it will disrupt the US market analyst's note, a fair few things have changed. Everything has been slower and more complicated than it seemed. The minority investors in Clearwire have been troublesome, something we pointed out as an issue. (NB We'll be discussing Disruptive strategies further at the EMEA Brainstorm in London, June 5th-6th).

But the real surprise was the intervention of satellite TV operator, DISH Network, which as regular readers of our news review will know, has tried to muscle-in on the deal with a rival bid for the whole thing. There's some more detail here, for background.

And the soap opera continues, with the latest gripping instalment. Softbank has issued an unusually combative response, in a presentation from CEO Masayoshi Son which describes DISH's proposal as "inferior", "incomplete", "inefficient", and "illusory", and asserts that Softbank's is "superior" no fewer than 7 times in 46 slides not counting front-matter. Clearly someone's read, marked, learned, and inwardly digested the bit of their Big Book of Behavioural Marketing where it says "If you do not repeat, you won't compete."

Son's presentation also goes after Charlie Ergen, DISH CEO, personally, endeavouring to scare the shareholders with the prospect of a company substantially controlled by Ergen personally (he would speak for 85% of the combined company, although he would only own 36%). Here's the action replay:

"I just deliver the results, instead of big-mouthing about the future," Son said. "Do you want to attach a satellite dish to your smartphone? It's going to become much heavier. I don't see any real meaningful value that he can offer to the smartphone customers."...."He himself admits he's an amateur to our mobile industry," Son said at the Tokyo event. "He does not have any history in our industry. So he's a newcomer -- totally, totally a newcomer."

There's certainly a bit of needle here - Son is punching upwards at Ergen, No.100 in the Fortune 500 with $10.6bn as against Son's No.128 with $8.6bn. Like Iron Mike in the streets of Brooklyn. Or something. Certainly, this is shaping up to be the most personal and embittered merger in telecoms since Vodafone-Mannesmann or perhaps the feud between the Ambali brothers at Reliance.

The ego wars besides, Softbank has some valid points.

A Cunning Plan?

Operationally, DISH's strategic concept can be described as "wireless quad-play". DISH's satellite TV network mostly serves rural or exurban customers who can't get decent broadband or cable thanks to long DSL copper runs and sparsity. DISH proposes to add a fixed-wireless broadband product - essentially Clearwire - to their TV product and then round it off with a mobile product, essentially Sprint mainline. And Charlie Ergen is talking about selling advertising across all three channels.

They have their reasons - subscriber growth in their satellite business has slowed to a crawl, and therefore they're looking for an upsell that would add some juice to their ARPU and margins. Son's presentation put it this way:

In the original, this appears next to Softbank's global subscriber numbers, which isn't really a fair comparison - why would Japanese UMTS subscriber growth tell you anything about US satellite TV? But who said this was a fair fight?

On paper, or rather slides, it makes a sort of sense - the idea of pushing TV alongside broadband is fairly standard. DISH has looked at the idea of broadcast-broadband integration before, cooperating with Verizon Wireless to develop a CPE device with a high-gain external antenna (the so-called "cantenna") that would get its TV from satellite broadcast and everything else from VZW's 700MHz LTE network, benefiting from the low frequency and the less demanding form-factor.

Tale of the Tape...

But this is slideware. Vendors love to tell you that LTE is the new DSL, but Sprint's spectrum position is massively skewed towards the higher frequencies. They have some 800MHz, but this is mostly earmarked for voice, and they recently had to swap some of it for 1900MHz space. They have quite a bit of 1900, but the mainline network and the growing LTE deployment lives in there, and 1900 is high for rural anyway. And of course there's the massive 2.5GHz Clearwire block.

Here's a Sprint graphic explaining their future plans for the spectrum:

DISH controls 45MHz of spectrum, but it's in a satellite service band at 2GHz, which makes it precisely non-standard for anything mobile. Note that the DISH contribution fits in where they don't really need it - up between the 1900 and the 2500, well in the "urban high-capacity" bracket, while the DISH-Sprint concept could really do with more 800MHz spectrum. Of course, you can always add more cells, but more cells mean more costs, and they also require getting permission for each one.

And although there is no such thing as a good LTE spectrum option - they all seem dreadful in subtly different ways - 2.5GHz looks more promising than 2GHz, simply because other people are using it. In our previous note, we pointed out that Sprint has suffered hugely from getting diverted off the LTE development path, and that Softbank's spectacular performance in Japan after 2008 was very much because they were the only pure UMTS operator in town (rather than FOMA), therefore benefiting from the iPhone 3G and cheaper equipment. Sprint shareholders and managers would be very unwise to get involved in another freak deployment, especially given the epic pain it's been closing down the old iDEN network.

Further, the whole LightSquared saga ought to be an awful warning for anyone who has the idea of trying to repurpose US satellite spectrum for cellular use.

Barclaycard? This man's in no state to go shopping!

Sprint has always had partner-network relationships, and they were a source of endless and expensive trouble during the Nextel merger. The consolidation of Clearwire is going the same way - in the courts again this week. The main reason for putting up with all this trouble was to raise capital outside Sprint itself. So, does it really make sense to do a deal that involves borrowing quite so much money? DISH, a much smaller company, plans to finance the transaction almost entirely by leveraging up. Specifically, they're borrowing most of the money from Barclays' Bank.

The Bear Blows First

Another of Softbank's objections is speed. Changing course now will mean more delay. Obviously this is self-serving, but there's a point here.

In our note, we pointed out that one of the biggest risks to Sprint-Softbank was that T-Mobile USA might get its act together and launch the disruption first, before the deal closed. And, well, that's happened. T-Mobile has tied up the funding from Deutsche Telekom, turned up LTE service, closed the acquisition of MetroPCS, secured a supply of iPhones, and initiated a new strategy based on no-lock-in, low-cost plans where you either bring your own phone, or else pay for a new one in instalments.

Our readers will no doubt recognise this as Softbank's old strategy. It's currently the cheapest way to acquire an iPhone 5 without breaking the law, so it should be no surprise that T-Mo has had customers queuing out of the doors and has registered net subscriber growth for the first time in years during Q1.

Meanwhile, although Sprint mainline added 351,000 net subscribers in Q1, and upped its service revenue to boot, it wasn't anywhere near enough to compensate for the loss of Nextel iDEN subscribers - another 771,000 left in the quarter. The iDEN-ers are leaving at rather more than twice the rate mainline is picking up subscribers. Perhaps killing off the first voice application developer community ever wasn't such a good idea.

Conclusions

The Softbank strategy for Sprint is simply to manage Sprint better as a pureplay mobile operator, making full use of the spectrum and the procurement efficiencies it brings with it and setting a disruptive price-point to reset the market. This basically implements the Happy Pipe option. The problem, though, is that T-Mobile USA is already in the field with this strategy.

DISH's proposal is far more ambitious, combining a challenge to the incumbents' carrier business with (yet another) attempt at the telecoms-as-media strategy. But it depends on pushing the limits of current LTE radio technology and working around a structurally deeply problematic spectrum position. It probably won't work.

Whatever happens, either Softbank-Sprint or T-Mobile or both are determined to smash the US price premium. From our Softbank-Sprint note, here's a (typically aggressive) Softbank chart that illustrates the point.

Softbank sees this as illustrating an "increasing trend" in their ARPU. But the decrease in everyone else's is far more dramatic. The worry for the other US operators is that Son's strategy to win this fight may drag his opponents' ARPUs down to SoftBank's level.


telco2.net | 01-May-2013 19:14

The Internet of Things (IoT): What's Hot, and How?


'The Internet of Things' (IoT) is one of the big ideas of the moment. But what are the areas in which value is being created now, and what is still technological hype? Our summary of the findings of the Digital Things session at the Silicon Valley Brainstorm 'The Internet of Things (IoT): What's Hot, and How' is now on our research portal.

Practical steps to develop and execute strategies in the Internet of Things will also be explored further at the EMEA Executive Brainstorm in London, 5-6 June, 2013, and we also run dedicated IoT Strategy Workshops.


telco2.net | 26-Apr-2013 12:21

Digital Entertainment: What Gets Measured Gets Money


For mobile entertainment services to generate revenues commensurate to the attention they receive, the industry needs to improve 'discovery' tools, create more effective creative inventory, and deliver proof of its effectiveness. Our summary of the Digital Entertainment 2.0 session at the Silicon Valley brainstorm 'Digital Entertainment: What Gets Measured Gets Money' is now on our research portal.

Practical steps to deliver better consumer experiences in digital services (including service 'discovery'), the Digital Economy overall, Digital Commerce and the Internet of Things will also be explored in depth at the EMEA Executive Brainstorm in London, 5-6 June, 2013. Please email contact@telco2.net or call +44 207 247 5003 to find out more.



telco2.net | 26-Apr-2013 12:21

EE: Running To Stand Still

Everything Everywhere, the joint venture between Orange and T-Mobile in the UK, recently announced its Q1 results that give a little further insight into the industry's journey into the 'digital hunger gap'. (Ed. We'll be exploring this and what can be done about it at the EMEA Brainstorm, 5-6th June in London).

EE is very proud of adding 166k postpaid subscribers, for a total of 348k since the launch of their LTE network, but the two underlying operators also shed 571k prepaid customers, while the "steady service revenue performance" is steady in the sense of "steadily falling", down -0.4%, or -5.4% counting the effects of changes to the termination regime.

Importantly, EE is now a majority-data carrier, with 51% of its revenue being non-voice, and 82% of its postpaid subscriber base on smartphones. The problem is illustrated by the following chart:

Although data revenues are going up, voice and messaging are eroding fast, and the chief answer seems to be migrating more customers onto the LTE network. The problem here is that migrating them over usually implies supplying a top-of-the-range phone, and therefore a slug of handset subsidy, and also that whatever uplift in data revenue is achieved must both compensate the loss of voice and messaging revenues and also pay for CAPEX as the new network rolls out.

(This said, it's worth pointing out that there EE decommissioned 548 cell sites in Q1. So there may be savings from LTE deployment, providing that the decommissioning is not instead a result of post-merger network rationalisation.)

The change in user behaviour is well illustrated by the infographic EE included with the results presentation.

It wouldn't be quite right to say that the voice and messaging that accounts for 49% of their revenues is hidden in the 8.2% of traffic marked "video calling and other" - having opted to provide 4G voice via circuit-switched fallback, this traffic would be carried on either Orange or T-Mobile's 3G or 2G networks. But it is certainly illuminating just how dominant general Internet activity, web-based video, and web-based music are.

We're also a little amused by the fact 0.77% of total 4G traffic is accounted for by Speedtest.net, the 10th biggest single attraction - that's got to be worth something in terms of publicity.


telco2.net | 23-Apr-2013 19:38

Digital Commerce: Show me the (Mobile) Money - Actions for Key Players


Many companies are struggling to build a mobile commerce business case that generates significant incremental revenues in the next five years. But some will ultimately use digital wallets to create a valuable platform that bolsters customer loyalty and produces substantial revenues from location-based marketing, advertising and the management of personal data.

Our latest research report Digital Commerce: Show me the (Mobile) Money describes the barriers, how can they be overcome, and the key actions for telcos, major Internet players, banks and payment networks. Digital Commerce strategies and the findings of this report will also be explored in depth at the EMEA Executive Brainstorm in London, 5-6 June, 2013. Email contact@telco2.net / call +44 (0) 207 247 5003 to find out more.

The Cycle and Functions of Digital Commerce

telco2.net | 18-Apr-2013 10:22

Facebook Home: what is the impact?


Facebook has launched 'Facebook Home', technically a shell around the Android OS, that in theory creates valuable new advertising inventory on the screens of users' phones. What will its impact be in practice for Facebook, and on Google, mobile operators, and other device manufacturers?

Our new analysis on Facebook Home is now on our research portal, and we'll be discussing these issues further at our Brainstorms in London, 5-6 June, and Dubai, 12-13 November. Call +44 (0) 207 247 5003 or email contact@telco2.net to find out more.

Facebook Home - Screen Shots


telco2.net | 11-Apr-2013 11:04

The Great Compression: surviving the 'Digital Hunger Gap'


In the next 10 years, many industries face the 'Great Compression' in which, in addition to the pressures of ongoing global economic uncertainty, there is also a major digital transformation that is destroying traditional value and moving it 'disruptively' to new areas and geographies. For the incumbent industry players we call the near-term results of this disruption 'The Digital Hunger Gap' - the widening deficit between past and projected revenues.

Our analysis of the top-level findings of the Silicon Valley Executive Brainstorm is now on our research portal (here), and we'll be discussing these issues further at our Brainstorms in London, 5-6 June, and Dubai, 12-13 November. Call +44 (0) 207 247 5003 or email contact@telco2.net to find out more.


telco2.net | 10-Apr-2013 10:54

40 years of mobile; Apple draws ahead again; growth at T-Mobile USA; "copper luddites"; Facebook Home; Hulu - Telco 2.0 News Review

[Ed: Don't forget to book now for the Telco 2.0 EMEA Executive Brainstorm, in London on the 5th-6th June]

It's been 40 years since the first cellular mobile call, from Martin Cooper of Motorola Research to the tribal enemy at Bell Labs. And if Gartner and ReadWriteWeb are right, mobile has "killed the PC market".

And this week, Comscore's rankings suggest that in North America, Apple is catching up on Android. 57% of US subscribers now have smartphones, with 91% of those being with the Big Two platforms. Horace argues that the increasing availability of older iPhones on free offers, and more carriers providing them, is behind this. As usual, the charts are pretty good too.

On the other hand, pioneer smartphone vendor HTC is suffering. Profits for the last quarter hit a record low, dropping through the analyst estimates, after their latest phone launch went off at half cock. The HTC One was meant to launch in 80 markets and made it to the start-line in three.

Here's the first low-cost BlackBerry OS 10 device, the R10 Curve. Meanwhile, Canada's export promotion agency vendor-financed 500,000 BlackBerries for Telefonica.

A nice 40th anniversary early adopter story.

T-Mobile USA has joined the price disruptors, and it's working - for the first time in four years, its "branded" customer base - i.e. excluding wholesale - is growing. Overall, they added 587,000 customers in Q1, concentrated in prepaid and in wholesale.

You'll also note that last week's AT&T/Verizon x Vodafone merger story has been denied to death, although of course the tale of the Verizon Wireless shares runs on.

Italy may be heading down to 3 MNOs, after Telecom Italia and Hutchison 3 Italy confirmed they are planning to merge.

Bouygues Telecom is going to launch LTE on the 1st of October, once its 1800MHz refarming is complete.

TIM Brasil has gone with Nokia Siemens Networks to build a LTE network in time for the footy.

China Mobile and Vodafone are jointly bidding for a licence in Burma.

Etisalat, which is trying to buy Vivendi's 53% stake in Maroc Telecom, has taken out a $8bn loan to pay for it.

Zain has put off floating its Iraqi operation until the second half of the year, while their boss is apparently "keen" on moving into Libya. Maybe life is boring after they sold the old Celtel sub-Saharan businesses to Bharti Airtel.

And Idea Cellular gets a $710m tax bill.

BT CEO Ian Livingston complains about his competitors being "copper luddites", because they want regulated access charges for BT's FTTC network.

He's responding to Charles Dunstone of Carphone Warehouse's remark that "there is so much government money going into subsidising higher broadband speeds but no one really knows where it is going and how it is being spent" - of course, Dunstone knows very well where it is going, because it's essentially all going to BT, strengthening its position as incumbent vis-a-vis the, er, "copper luddites".

The Daily Telegraph also runs an uncritical profile of Openreach CEO Liv Garfield.

Meanwhile, Google Fiber may be coming to Austin, Texas. Google also commissioned Benoit Felten to write a paper on net neutrality.

The UK's emerging small cell industry is being bought up. PicoChip was snapped up by Mindspeed Technologies, Cisco grabbed a stake in ip.access, and now Ubiquisys is a Cisco division for £205 million.

22% of the British use public WiFi at least weekly. We'll be updating this Analyst's Note on public WiFi very soon.

Indosat is looking to double its WLAN assets, in what it describes as "WiFi offload". We must have heard that one before?

Tests on UK 4G deployment suggest that TV interference isn't a problem.

Twilio is now available with Google App Engine, and they're giving away minutes for new GAE users. It just gets easier to deploy voice. They also took part in a hackathon sponsored by the FCC, which set a challenge to do something about robocalls. The upshot, basically a voice spam filter, is described here.

Simwood discusses Ofcom's review of narrowband. The DEA doesn't like Apple's iMessage, as the encryption actually works. RevK has finished implementing the PABX functions in his Firebrick routers.

As well as fixing the problems with HTC One launch, HTC is pinning its hopes on a new product. Facebook announced its "Facebook Home" this week. It's not exactly a Facebook Phone, but rather a UI overlay for Android, but it will mostly be shipped with the HTC First phone on AT&T and Orange, so a lot of users will probably experience it as such. We're covering this development in far more detail in a separate note, so watch this space.

Hulu is up for sale again, and the leading bidder for the TV networks' online TV network is a former News Corp executive, Peter Chernin, whose buyout vehicle is offering $500 million. As always with Hulu, and indeed media operations more generally, the key will be the terms on which it can get content from the rightsholders.

Dan Rayburn is scathing about the hype around Aereo, the company that wants to pick up broadcast TV and re-stream it on the Internet. We would go further. If Aereo is meant to compete with cable TV, it has a huge problem: the cablecos are very good at distributing online video, whether because they have more capacity for Internet streaming, or because they can just broadcast it via the traditional CATV channel. It makes no fundamental economic sense to take content from a more efficient distribution system and distribute it via a less efficient distribution system, unless something subsidises the distribution heavily.

Dan also thinks you should calm down about HEVC, the magic video codec that will solve all your problems according to its promoters. It's still expensive and there's no content, and those are the least of the problems.

What's the online business model most likely to succeed? According to a leading VC investor, it appears to be selling something to people who will give you money for it, an option so radically new you can be certain nobody's considered it before.

However, TenCent says it has no intention of charging for WeChat or QQ. But Nokia is charging the equivalent of 1.5p a month for Nokia Life, its emerging market SMS-based service, which just landed in Kenya.

Free Android apps are worryingly spammy.

After Google shuttered the Reader, Should Yahoo! jump in to save RSS as a format?

A group of Sun Microsystems veterans are working on a big data/cloud optimised storage module that integrates some processing into the storage. Understanding Google's flit from WebKit. Firefox 20 update drops.

Ever wondered where all the patents are coming from? A study suggests the US Patent Office lowered its standards to keep up with the pace.

From the Internet of Things to the Web of Things: High Scalability notes an interesting dissertation on the future of M2M.

BBC Research introduces the Stagebox, a device that plugs into TV production equipment and puts it on the Internet, thus making an all-IP production environment possible.

Don't miss UKNOF 25 in London on the 18th April, which has a truly impressive line-up.


telco2.net | 08-Apr-2013 13:14

European Telecoms: Peace with OTT, War on the Regulators

So, what broad, strategic themes are emerging this year? We've been mulling over the news, discussions with clients and within our team, and our experience at the GSMA's Mobile World Congress (MWC) 2013 in particular.

[NB. Our coverage of this year's MWC has been extensive - see our MWC news summary, this update on free, this article on the future of voice, and Smartphones: when will Huawei be No.1?.]

In this article we briefly examine developments on two perenially important themes: regulation and competition. [You can also join us at the EMEA Executive Brainstorm, 5-6 June in London to explore strategies relating to these issues.]

Hating The Regulators

One important function of the keynotes at MWC is to act as a lobbying megaphone for major operators and the GSMA. The common theme in all the megaphoning was that the regulatory environment, especially in Europe, lacked "industrial focus" and was putting too much emphasis on consumers as against infrastructure development and, to be blunt, the industry's desire to make a reasonable return on capital.

Plus, as we pointed out in European Mobile: The Future's not Bright, it's Brutal and this update on Voda and Telefonica, the commercial and economic enviroment is quite rapidly deteriorating for many European telcos. So the telcos' exclamations of pain carry a lot more conviction and validity these days.

The main case study of this is, of course, Free Mobile (see Free Mobile: A Prototype for Disruption? and this update on the latest numbers). ARCEP and the French government spent a lot of time giving the operators precisely what they wanted, an orderly, not-too-competitive market. It also gave French users prices around €10 a month higher than in the UK or Germany for services that weren't obviously better.

The Free Mobile experience has shaken everyone up. A major message was "Please don't do it to us". A further message was generally complaining about roaming and termination rates. That's not news, although it will always be important. But on the other hand, the operators were keen on something called "internationalisation"....

Give Us Competition But Not Yet

What does that mean? Well, in part it's consolidation. The UK has gone from five operators down to four, with a considerable degree of infrastructure sharing via MBNL (the infrastructure company that links the EverythingEverywhere partners with 3UK) and Cornerstone, the Vodafone-O2 UK partnership. A similar story can be found across Europe. But according to one of the panellists, the UK is "operator hell" - what must they make of Uganda?

Obviously the so-called EU5 operators would very much like to take their markets down to 3 operators or even fewer, as in Switzerland, but the French experience suggests that regulators are going to be chary of this. And the general scepticism that must be applied to mergers and acquisitions is required here. Although MNOs are cheap at the moment, compared to historical levels, big mergers across a wide range of industries tend not to deliver the economic benefits they promise.

But there is another kind of consolidation. This could be described as internal consolidation. Operators could consolidate internally and be more "international" by centralising more of their functions and by hollowing out their national operating companies.

The structure of multinational operators is determined by regulation, specifically the fact that licences are national and require a substantial OpCo organisation in each country. Although many operators have set up centralised IT functions and service centres, and regionalised some of their management, their OpCos are usually quite substantial, especially when the group has grown by acquisition. The cost of this comes both in maintaining the organisations and in the variety of IT systems that result. Vodafone is an example of an operator that has made progress in horizontalising its structures and consolidating its IT into a small number of strategic data centres. They have also worked hard in providing central shared services for back-office functions, such as procurement and finance.

This is likely to hit first in Europe, and we did hear the phrase "single European networks" used at MWC. It's also a possibility in Africa, where a lot of operators already regionalise their smaller OpCos.

Something new, though, was the sight of vendors arguing for infrastructure sharing and internal consolidation. Gabrielle Gauthey, Alcatel-Lucent's VP of government affairs, gave a presentation in the network track arguing for "moving away from facilities competition" and much more passive infrastructure sharing. Vendors are normally more than keen on facilities competition because it helps them shift more units. She also argued for carrier-neutral investment, perhaps including public investment, in the 700MHz band when it becomes available in Europe, although the European Union's recent budget decision to zero out funding for broadband networks makes this sound less likely.

Declaring Peace with the OTTers

In a sense, all the bluster targeted at the regulators can be seen as a smokescreen protecting a strategic retreat. A major theme we've picked up is that the operators appear to be preparing to bury the hatchet with the so-called OTT players. This is of a piece with the increasing acceptance that the core business going forward is being a profitable data-centric ISP, the Happy Pipe option, plus whatever Telco 2.0 services seem advisable. (See A Practical Guide to Implementing Telco 2.0 and Dealing with the 'Disruptors': Google, Apple, Facebook, Microsoft/Skype and Amazon for our analysis on the best steps to take in new services and with respect to the 'OTT' ecoystem, respectively)

Réne Obermann's keynote was a case in point; having joined in with the regulator-bashing session to begin with, he then moved on to presenting a strategy heavily influenced by "own-brand OTT" and partnerships with more OTT brands. With the voice & messaging wars over, in a sense, everything is now an OTT service. Obviously, this will only accelerate the move towards zero-rated voice.

But Something Needs Doing...

Perhaps the most shocking statistic of the show was that 8% of global LTE investment and 5% of FTTH investment is in Europe. 70% of world LTE investment is going into the United States. Part of this is the dreadful macroeconomy, of course, but then again our view is that improving the climate for investment in broadband would provide much-needed help in fixing the EU economies.


telco2.net | 26-Mar-2013 11:26

Snails, Gazelles, Damn Lies and Average Broadband Speeds

Telco 2.0's Senior Analyst Keith McMahon is not usually an angry man, but today he's uncharacteristically incandescent with rage. The reason is that he has analysed the latest stats from the UK's regulator OFCOM and he smells a rat. Or more accurately, a mixture of snails, tortoises, humans, gazelles, and twisted statistics. Here, only lightly edited to protect more sensitive readers, is what he shared with the Telco 2.0 team this morning.

Another day brings another bunch of misleading statistics released by OFCOM. The headline today was "UK average broadband speeds up to 12Mbit/sec". This headline figure, which was lazily lapped up by the majority of the British press as a sign that things are hunky-dory, hides a lot of truth about the underlying state of the British broadband market.

The chart above and vast qualification adequately describes the real state of the UK broadband superhighway. Basically we have three lanes: tortoises (between 2Mbit/sec and 10Mbit/sec), humans (between 10Mbit/sec and 30Mbit/sec), and gazelles (above 30Mbit/sec). The tortoises and humans haven't improved at all - the gazelles have merely pulled away. Using the speeds above, one gazelle carries the same weight as five humans and ten tortoises in calculating the averages.

Virgin Media announced in March 2012 that it was effectively tripling its speeds at no extra cost. The tiers are now 30Mbit/sec, 60Mbit/sec, and 100Mbit/sec.

The impact on its base has been transformational - humans turned into gazelles, at no extra cost, without the need for a truck roll. The chart above shows the situation at Q3. By Q4, Virgin Media now had 2.2m gazelles on their network, which is around 50% of their base. A truck roll and more money are required for a customer to transition to the Openreach gazelle network, which almost certainly means adoption is much slower, but BT conveniently do not release consumer adoption figures.

OFCOM's estimate of the split between gazelles, humans, and tortoises are shown above. But where are the snails (below 2Mbit/sec), which count for 1% of the market? They are conveniently not monitored anymore. I'm not sure of the logic for this, but it certainly helps to keep the charts looking good.

There are some other tricks which have been included not only to improve the presentation but also keep the averages up. The first trick is ignoring rural customers for the tortoises' comparison. Market 1 is defined as where BT has no unbundling in the exchanges. When OFCOM announced the market definitions, this accounted for 11.1% of UK homes. As these tend to be in rural areas with long copper lengths and therefore lower DSL speeds, the snails appear less sluggish then they really are.

The second trick is ignoring copper loops of over 5km for the humans' comparison. This is another 15% of UK homes, although there will be a substantial overlap with the Market 1 homes. Again, this only ups the human average.

The third trick is to only include on-net customers for Sky, TalkTalk, O2 and Everything Everywhere, i.e. where they have been unbundled. Theoretically, this could be either a positive or negative to the calculated averages, but the mere fact that they have been excluded from the sample raises my eyebrows. In fact, I'm not sure whether this has really happened, as Everything Everywhere figures are included in the detail of the report. As far as I was aware, Everything Everywhere gave up its LLU a couple of years ago and ported the base onto BT wholesale unbundled products.

The fourth trick is that the gazelles are overrepresented in the samples, which may be self-selecting. This, of course, ups the average. This self-selection was my main issue when OFCOM announced the broadband speed project. Basically, the people who would volunteer to have an extra piece of CPE in the home monitoring their connection are tech-savvy users. The type of users who insert the correct filters to the main phone line and try to achieve the best possible speed for their connection.

This is not representative of the average UK broadband user, who probably connects the router to the most convenient phone extension in the home, and thus has reduced speed. The fact that more of the sample are upgrading to superfast broadband only reinforces my belief that the sample is not representative of UK broadband users.

I know the founder of Samknows, the company that OFCOM subcontracts the project to. The original project was conceived from the belief that the UK consumer deserves to understand the true performance of the UK broadband providers, rather than accept the advertised headline speeds. The project also sought to educate them that peak hour speeds, latency, and packet loss were just as important as absolute speeds.

Today, I feel that the project has been hijacked and exploited by OFCOM for political propaganda - "look at how fast our average broadband speeds are". The truth is that our broadband highway has four lanes for snails, tortoises, humans, and gazelles, and speeds are not significantly changing within these lanes. What has happened is that the company with the best overall network, Virgin Media, has decided for competitive reasons to upgrade speeds to a large part of its customer base. Good for Virgin Media and good for their customers. Meanwhile, the rest of the UK awaits BT Openreach to upgrade its crumbling copper network. The politicians have a great headline grabbing message, but most of the UK remains unaffected.

Brave readers can find the full report here: http://stakeholders.ofcom.org.uk/market-data-research/other/telecoms-research/broadband-speeds/broadband-speeds-nov2012/

For what it is worth, I am human, on an ADSL2+ LLU network achieving speeds of around 3.5Mbits/sec. I'm gutted.


telco2.net | 15-Mar-2013 16:14

Voice: free, dead or the killer app? It's certainly in disruption...

So, Telefonica O2 Germany is offering free voice and messaging on four tariffs with pricing determined by data rate, from €19.99 for basic with 3.6Mbps up to €50 for 50Mbps LTE up to 5GB.

Meanwhile, back at the Mobile World Congress, the CEO of KT told us that his voice business is "rapidly collapsing", with fixed revenues nearly halving between 2010 and 2012 and mobile down by a billion dollars in the same space of time. And Hakam Kanafani, the Group CEO of Turk Telekom, was positively apocalyptic:

"Voice is God's gift to humanity. It's what differentiates us from the animals. And we position voice at zero -- you don't have to pay for voice. Voice is dead."

Much drama indeed, though regular readers of Telco 2.0 will know that we've been talking about the business model transition facing voice and messaging for a number of years. We've also recently published bleak views on the outlook for voice in Europe in European Mobile: The Future's not Bright, it's Brutal, and we're working on further global analysis on both voice and messaging as a whole, and the stage of the transition of telecoms and other digital industries.

European Core Mobile Services Revenue
Source: European Mobile: The Future's not Bright, it's Brutal

We'll be sharing more of this at the Silicon Valley Brainstorm in San Francisco next week, and at the EMEA Brainstorm in London, 5-6 June (please email contact@telco2.net to contribute or find out more).

Anyway, going back to one of this year's CEO bandwagons at MWC, Vittorio Colao of Vodafone didn't go quite as far as say that 'voice is dead', but then he doesn't have an incumbent fixed network to worry about. However, he did discuss the RED tariffs, introduced first in Spain, which work much the same way at different price points. The new pricing strategy, he argued, is "unlimited voice & messaging with generous data" - which implies that voice isn't a significant driver of cost any more.

Voice: becoming decoupled from costs?

The good news is that, because voice is no longer a significant driver of cost, going to "unlimited bundled" or "free" voice isn't as big a problem as it might seem. It's pushing packets, specifically video, that drives cost. And it's never been cheaper to provide voice. One data point comes from Viber, an OTT voice & messaging app whose CEO Talmon Marco spoke at the event - it costs $200,000 a month in OPEX to serve 175 million users with VoIP and instant messaging.

In our Free Mobile note, we point out that Free's cost structure is a "tell" here - it needs to charge enough for mobile voice to support a thin overlay cellular network, and to pay termination on only that fraction of their offnet voice that doesn't get least-cost routed onto SIP peerings that are either free or very cheap.

It's all about the experience, isn't it?

That said, as Viber's CEO pointed out, price isn't the problem. One of Viber's highest-penetration markets, at 90%, is Monaco, after all, where they're aren't short of a bob or two and anyway the local MNO bundles unlimited SMS. He said that the customers use it because they like the experience better.

As we've been saying since 2008, the future of voice is that voice becomes a software application, and as such, it will sell on features and user experience rather than a utility-like model. To dip into our Twitter feed, KT's CEO repeatedly made the point that future telco services must be better than OTT competitors.

Or is it in the OTT-bundle?

Alternatively, another answer is to declare peace with the OTTers. Essentially, this takes the strategy of bundling voice and messaging and eliminating out-of-bundle costs a step further. Assuming that everyone ends up bundling unlimited voice, how do you differentiate in order to compete, if not on the features and the user experience? Viber at least is (possibly too) enthusiastic, being "delighted to integrate with your IMS".

But that doesn't mean telcos have no future in their own right. While Vodafone's RED tariffs adjust down to unlimited voice and messaging and managed data revenue growth, their One Net enterprise Voice 2.0 product is doing good business, with 2.4 million customers globally.

In fact, you could characterise Vodafone's strategy as being "Happy Pipe in retail, enrich products in enterprise".

Or is it 'getting hacked into apps'?

Meanwhile, the Voice 2.0 community was much in evidence at MWC with vendors like Voxeo, Twilio, AcmePacket, and a few even we hadn't heard of, plus the emerging WebRTC community, which these days includes Ericsson and Metaswitch. Voxeo's technology, in particular, is now deployed with telcos as gigantic as AT&T and Deutsche Telekom, supporting the Call Management API and the voice aspects of DeveloperGarden respectively. And Telefonica is pushing its Tu GO product out to more markets, while buying AcmePacket technology to support the scale-out. At the WIPJam hackathon on day four, we were struck by how many of the projects involved telephony of some form.

And longstanding Telco 2.0 ally Tim Panton, of PhoneFromHere fame and now with Voxeo, was struck by the fact that one of the developers entered the same app in the DTAG and AT&T hackathons - both carriers implemented Voxeo's Tropo.com platform without being tempted to alter the API, so the app could be ported between them without needing further integration work. Hackers gonna hack.

Disruption is temporary, change is permanent

So, the future is here, for good or ill. We're now moving fast into a world where voice and messaging are zero-rated products.

At a little more length, we would argue that the industry faces a disruptive transition in terms of customer behaviour, which will not flip back to pre-crisis conditions. Fortunately, for many operators the core business is no longer reliant on voice revenues, but rather on running a profitable happy pipe ISP. Future voice business models are based on features and freemium. And the Voice 2.0 technologies were in the euphoric sector of the hype cycle in 2008-2010, and have now crossed the chasm.

We'll be discussing this in much more depth in our forthcoming Voice Strategy Report and at our brainstorms. Watch this space.


telco2.net | 15-Mar-2013 12:22

Smartphones: when will Huawei be No.1?


We were surprised to hear Huawei's objective of becoming the world's No.1 Smartphone maker at last year's Mobile World Congress, and somewhat dubious whether it would achieve that goal. However, at this year's show Huawei demonstrated impressive progress, and we consider it is no longer a question of if, but when it will achieve its goal. In this analysis we explore industry scenarios and their consequences.

You can also join us to discuss this and other industry disruptions next week at the Silicon Valley Executive Brainstorm, 19-20 March, and at the EMEA Brainstorm, 5-6 June, London.


Huawei P2 Ascend Smartphone

telco2.net | 14-Mar-2013 16:43

Free Mobile hits 8% share, wins with 'reverse quadplay'

When we published Free Mobile: A Prototype for Disruption? before MWC, we didn't yet have Free's indicators for Q4. We still don't have full financials, but we do have some subscriber and turnover information now, and our analysis of what that means is below. For further reference, Les Echos summarises the story nicely, and the press release is here.

We've also recently published Sprint-Softbank: how it will disrupt the US market, and analysis on the ongoing disruption in Europe in European Mobile: The Future's not Bright, it's Brutal. We'll be looking in further depth at disruptive digital innovation strategies in telecoms, music, video, commerce, and 'the Internet of Things' next week at the Silicon Valley Executive Brainstorm in San Francisco, and at the EMEA Brainstorm in London, June 5-6. Email contact@telco2.net to find out more.

Another 805,000 net adds - Free's break-in phase has gone very well

Free Mobile scored another 805,000 net-adds in the fourth quarter, taking them to 5.2 million subscribers after one year in operation or 8% of the French market by subscribers. There is still substantial momentum, with 55,000 net number ports to Free in the week before the announcement compared with 26,000 to SFR and less than 17,000 for both Orange and Bouygues. The total is positive because the MVNOs have been hammered, and also because penetration has risen by 10% in 2012.

This penetration figure is to a degree understated, because there are about 6.5 million dongles and M2M devices in circulation, and Free Mobile doesn't currently compete in these sectors, so additional growth will be concentrated on what might be called the human market.

Mobile drives fixed sales, fixed cash flow finances mobile investment

This turnover in mobile was €844 million for the full year, equivalent to a monthly ARPU of €16.70. Although it is tiny compared to France Telecom-Orange's €10.7bn turnover in mobile, Free started 2012 at zero. But perhaps the most interesting feature here is that the mobile offering is driving "reverse quadplay" - all the publicity, plus the sell-through opportunity and the discount on mobile if you take fixed, is bringing in net-adds in the fixed sector, which added 107k net subscribers in Q4 (vs. 110k for Bouygues, 66k at Orange, and 35k at SFR).

For the year, that's 515k net-adds or 9% annual growth. In many markets, it's been assumed that fixed broadband is now an ex-growth sector. Clearly, this isn't necessarily true.

This is important, even critical. In H1, Free's fixed operations generated an EBITDA margin of 40% and €229 million in free cash flow, with an ARPU of €38/mo for users on the latest Freeboxes. Obviously, new signups driven by mobile will be getting the new devices.

So, mobile net-adds drive the cash-cow fixed business, and its free cash flow helps to finance the mobile roll-out.

A critical question is how much of the potential for reverse quadplay has been exploited already. There are 5.4 million fixed subscribers and 5.2 million mobile; if there were no reverse quadplay customers among the fixed base, that would be enough to almost double the mobile subscriber base. If all the mobile subscribers have already taken fixed, this source of cross-selling growth is practically exhausted. We know that the truth is somewhere between the two extremes, but Free is keeping the actual number close to its chest. Its Q4 turnover statement just says that it's "globalement equilibré", or "balanced overall".

Subscriber growth may top-out early, but profitability is nearer than you think

Looking ahead, we used a Bass diffusion model to estimate the Q4 market share number for our analysis, which predicted market share of 8.11%. Updating the model with the out-turn, we expect that mobile subscriber growth will level off in 2013 as Free Mobile approaches 10% national market share. Rather like the French paratroopers in Mali, they have successfully seized the airfield and unleashed mayhem on the enemy. But what happens next?

One of the amazing things about the Free Mobile story is that it's actually not that far from breakeven at the EBITDA level, this early in the game; it lost, or rather spent, €44 million in H1 on revenue of €320 million. In the light of our forecast for market share, we expect that having achieved their break-in to the mobile market, Free will now consolidate their position and concentrate on moving the mobile operator towards profitability by:

  1. Upselling fixed products to the new mobile subscriber base;
  2. Managing down the national roaming bill.

If our diffusion model is right about total subscribers, and "globalement equilibré" means "roughly 50/50", that means there are about 2.5 million potential candidates for upselling.

In the Free Mobile note, we mentioned that (admittedly unaudited) data on how much user time is spent on their own network shows a step-change when 900MHz spectrum became available in January. As Free Mobile's OPEX is closely linked to how much traffic is carried by Orange under national roaming, and Free has no control over Orange's roaming tariff, bringing traffic on board improves their margin, as does then offloading it to WLAN.

We therefore expect that profitability will surprise on the upside and subscriber growth on the downside. This is subject to the possibility that they will choose to hold profitability down, by bringing forward capital investment and rolling out faster, or by cutting prices again. This depends on their preference for growth vs margin, and on regulatory/political issues.

Key risk factors

The major threat to Free Mobile's success is probably self-disruption, that is to say a failure to manage the consequences of success. The fixed operator is under pressure regarding customer experience and quality of service issues, possibly because of the effort to harvest its cash for the mobile operator's CAPEX needs.

Given that Free Mobile subscribers are not tied in to a long term contract, and the French mobile market has well-functioning mobile number portability, an "Instagram event" - i.e. a misjudgment that goes viral and causes a sudden exodus of users, as when Instagram changed its terms of service and accidentally revived Flickr - could reverse a chunk of the subscriber growth rapidly. This is much more likely in the case of the mobile-only subscribers, as opposed to the quadplay subscribers, who are also more likely to be committed fans and advocates of the company. It is therefore urgent to carry out the consolidation we described above.

We do not think there is a threat of a regulatory reversal, for example, lifting the national roaming requirement. This would essentially imply killing off Free Mobile, and would certainly be held up in the courts for an indeterminate period of time if it was not struck down immediately. Further, the French regulator ARCEP's recent statements still express satisfaction with the impact on consumers, and the political level is still under more pressure to deliver consumer buying power (pouvoir d'achat) than it is to please the original three operators. ARCEP's latest decision can be summed up as "no move before 2018, and don't frighten the horses".

Additional opportunities

We have assumed a relatively simple scenario in which Free Mobile, having smashed its way into the market, has raced up the diffusion curve to arrive at an enduring share of around 10%, and then moved to consolidate the customer base by integrating them into its profitable fixed services.

Free is historically an innovator, though, and they may not be satisfied with this. It is possible that they will seek a new S-curve to ride, especially as they will soon need to look at 4G with its concomitant investments. They are already very much involved in online services in fixed, but they have wisely never been tempted to declare themselves a media company. M2M and wholesale are ruled out by the lack of a full national coverage footprint.

However, their in-house strength in software, UX design, and product management creates a lot of option-value. Many observers were expecting something disruptive in voice or unified communications, which remains a possibility. Free is also mostly a consumer/power user business. A move in the SMB space is therefore also a possibility, as is a further price disruption, perhaps in roaming.


telco2.net | 13-Mar-2013 07:32

We're recruiting: Marketing Communications and Communities Manager


STL Partners is seeking to recruit a Marketing Communications and Communities Manager as a key part of our plan to help take the business to the next stage of growth. Responsibilities will include producing marketing and customer communications (e.g. newsletters, websites, brochures), digital marketing (e.g. SEO, social media, and email marketing), and the management of our database.

A key measure of success will be to achieve a significant increase in inbound sales leads within the next year as a result of this appointment. This is a full time role and will be based in Shoreditch / Liverpool Street, London. Please see full description and application details here.


telco2.net | 20-Feb-2013 17:24

Cloud 2.0: CxO Lunch in Barcelona - 27/2/2013


At MWC this year Telco 2.0 will be hosting a private roundtable lunch with Cordys, on Wednesday 27th February 12:30-14:00. The topic for discussion will be 'Opportunities for Telcos in the Cloud'. The debate will be facilitated by Telco 2.0 Senior Analyst, Bob Brace (formerly Global Head of Cloud Services, Vodafone Group). Bob will present highlights from the Telco 2.0 Cloud research covering: market growth, size and service development; key players and their strategies; telco activity in the cloud market and key opportunities for telcos in the cloud market.

Bob will also be joined by former Head of Cloud Strategy, Orange Business Services, Peter Martin, who will draw on his recent experience as Head of Cloud Strategy for Orange Business Services focusing on the services and applications of tomorrow, future infrastructure, and how telcos might offer unique value to their customers.

If you would like to join this session please email: contact@telco2.net and someone will be in touch to reserve your place.


telco2.net | 18-Feb-2013 17:36

AT&T 'loves' OTT; India gets even more competitive; Cloud comms grow - Telco 2.0 News Review

[Ed. Five weeks to the brainstorm in Silicon Valley, 19-20 March 2013, and then on to our European Brainstorm, 5-6 June 2013. We'll also be at the Mobile World Congress next week for which we can offer discounted passes - email us at contact@telco2.net to find out more.]

Randall Stephenson of AT&T has been known to say aggressive things about the OTT players who use his network "without paying" and so on and so forth. Here he is, though, on a very different tune.

"If the world moves to the OTT video model, that doesn't keep me awake at night," he said, adding that AT&T has approximately 4.5 million U-Verse IPTV video customers but the company's real driver is its broadband customers. "Our money is made off the broadband product ... The consumer who acquires video off our broadband is not a bad model for us."

In related broadband and video news, some results are in from the French three-strikes experiment. Traffic to P2P sites is down. Hurray. Traffic to digital-locker sites is down. Perhaps half a hurray. But so are record industry sales. No hurray. The lurking-variable is probably the shift from P2P systems to streaming services.

Free are involved in a new row; their Freebox Replay video on demand service has been suffering for a while from bandwidth issues, and now they're suggesting that customers affected might want to pay a fee for "priority access". Existing customers suspect that the problem is being deliberately left unsolved to bring in the money.

Dan Rayburn reviews Amazon Web Services' CDN activities, and specifically their increasing support for dynamic content. Over time, the offering has gained many more features incrementally, and AWS seems to be following a Google Ads-like strategy of trying to expand the addressable market by drawing in customers who otherwise wouldn't have used CDN at all.

He also reviews another media-streaming gadget.

And the BBC is supporting an effort to add DRM features to HTML5.

In India, the holders of BWA (Broadband Wireless Access) spectrum have been told they can start providing voice if they pay a relatively small fee. With this, plus the price-war conditions, and a regulator increasingly keen to soak the carriers, it gets difficult to see how many of the Indian operators can be profitable.

SK Telecom's Joyn implementation has a million subscribers.

No Jitter makes a case that Cisco CEO John Chambers is wrong in saying that "video is the new voice". Instead, they argue, "text is the new voice", for reasons rooted in the user anthropology of telephony.

That said, Unified Communications as a Service (UCaaS), things like Vodafone OneNet, is forecast to be worth $7.62bn by 2018, growing at 24% CAGR.

Skype is getting a video-messaging feature, which is coming first to non-Windows platforms.

Truphone has been through a couple of evolutionary stages, from mobile VoIP client, to roaming MVNO, and now to hybrid WLAN/MVNO. Their new app takes over the dialler, checks quality metrics on the cellular network and nearby WLANs, and decides whether to route calls over the cellular channel or SIP over the WLAN. If the WLAN is good enough, it will offer HD voice.

AcmePacket argues that WebRTC standardisation will go faster than expected, and at the very least, much faster than SIP (although that says more about the development of SIP).

The Fonolo blog links to five key posts on WebRTC. This argues that applications come two to three years after protocol stacks. This one argues that WebRTC doesn't matter, at least not in the enterprise context, because the real problem is the call centre.

Using WebRTC to adjust the fonts on your website, by tracking the user's head in their webcam. You may find this a little creepy.

CEBP specialist Voicesage's revenues are up 32% on the first half of its year.

BigMarker is a web-based conferencing service aimed at teachers that provides for record, transcribe, and replay.

A nice video from Phono:

OpenBTS is coming to MWC.

Is fax finally dead? And EU has a budget "for European growth", says Neelie Kroes's blog. In a manner of speaking. The outcome of the budget negotiations was an overall cut to the union's budget that mostly came from investment, and the Information Society DG is no different.

As Neelie's blog points out later on, this means that EU funds for broadband infrastructure under the Connecting Europe Facility have been zeroed out. Apparently there's still some money for "digital services", and the European Investment Bank might have some, but projects like this B4RN community fibre build shouldn't expect much.

You've got to do something, so the EU Commission is taking an interest in duct-sharing.

Horace reports on Tim Cook's comments about Apple retail, and includes a chart that shows that the pattern of being heavy on the staff goes on. While the ratio of profits to employees in retail is very gradually rising, the head count is going up faster and therefore the business is only expanding.

Elsewhere, there's a map of Apple suppliers, and Ars Technica tracks down a weird rumour about Apple engineers being assigned to "fake projects" and finds it baseless, and Cult of Mac reviews one analyst's predictions about Apple.

More seriously, weak PC sales are a thing for Apple as well, and they responded by cutting prices as much as 15%, especially on the MacBook Pro line.

Samsung's new low-cost Windows 8 phone, reviewed. More on iOS 6.1 problems. The developer preview of Ubuntu Phone will drop on Thursday, nicely ahead of MWC.

Data-centre landlord DuPont Fabros is looking at building more, smaller data centres to appeal to enterprise customers rather than Facebook-sized Web monsters. They're now planning to invest in units of 4.5 megawatts, compared to increments of 18 MW and 400,000 square feet in the recent past.

AWS's Redshift data warehouse product is now broadly available, which isn't quite generally available in Amazonspeak.

And here's this week's cloudfail. RapGenius, your No.1 source for hip-hop lyrics, runs on Heroku, and is spending $20,000 a month with them, making them one of Heroku's biggest customers.

They observed that measurements of latency from their own analytics and Heroku's could be dramatically divergent, and eventually discovered that Heroku's load balancing algorithm had changed dramatically, from a fair-queueing approach to a random distribution approach. They simulated the difference and concluded that they were being overcharged by a factor of 50.

There's much more discussion at Hacker News, and Heroku apologises here.

Gemalto and Ericsson are working on an embedded, soft-SIM M2M product. A buyer for Telecom Italia's TV operation? Fearsome Chinese hacker also sells Facebook likes. Marissa Mayer kills 60 Yahoo! apps and buys a couple. INQ ventures into content recommendation. Renesys tracks the impact of a Black Sea cable cut. Sinister mystery with Singapore, Huawei, and advanced semiconductors.


telco2.net | 18-Feb-2013 12:36

Cisco VNI; EE, Virgin Media bids; WebRTC milestone; BB OS10 'positive' - Telco 2.0 News Review

[Ed. Six weeks to the brainstorm in Silicon Valley, 19-20 March 2013, and then on to our European Brainstorm, 5-6 June 2013. We'll also be at the Mobile World Congress for which we can offer discounted passes - email us at contact@telco2.net to find out more.]

Cisco's VNI report is out and there are basically three stories in it. First up, and no surprise, traffic on mobile networks is dominated by video, just like the fixed kind. Secondly, overall traffic growth has been revised down by 30% since this time last year. And thirdly, almost a third of smartphone traffic is being offloaded via WLAN. Between that and better cellular networks, the average smartphone is enjoying a download speed of just over 2Mbps. Interestingly, the distribution of traffic is flattening out - in 2010, the top 1% of users accounted for 52% of the total, but now, this is down to 16%.

In the US, the FCC is keen to break out the 600MHz band for white-space operations. A fierce political row is under way, while the press were immediately convinced that free Wi-Fi for everyone was coming. Ars Technica cleans up the mess.

Microsoft is interested in whitespace technology as a way to deploy better Internet connectivity in Africa.

Meanwhile, France Telecom and Alcatel-Lucent deploy a 400Gbps wavelength link for the French NREN, the first in the world. That said, ALU's Q4s were dreadful and Ben Verwaayen is on the way out.

Benoit Felten links to an infographic on US broadband that only contains two actual charts. Is this a record? Much more to the point, he's been interviewed about STOKAB, the Swedish prototype of municipal fibre deployments.

A massive debate on that subject took place last week on NANOG, and the upshot is a succession of threads rich in information and experiences. Start here and move on here, here, here, here, and here. It was also time for the NANOG meeting itself, and as usual the notes - available here - are fascinating.

Meanwhile, here's the Aussie NBN's page on how to deliver content efficiently with its IP multicast service.

Muni-fibre isn't the only way to get to universal high-speed connectivity. The DOCSIS cable route has worked pretty well too. Virgin Media is up for sale, with a £15bn price tag, to John Malone's Liberty Global.

Vodafone numbers are out, and they're not good. Revenues are down groupwide by 2%. Southern Europe is dreadful, of course, but things weren't good enough in the relatively healthy economies of Northern Europe to compensate. The UK, for example, wasn't particularly healthy economically and was hit by fierce competition from EverythingEverywhere.

Also, there are signs of customer behaviour changing, rather as there are in southern Europe. Out-of-bundle usage is down sharply, as customers counteroptimise their usage to save money. In the South, meanwhile, they're having to up the bundle sizes to defend market share. Fortunately Germany and Turkey were better.

EE, for its part, might be the subject of a mammoth private-equity bid. The proposed deal would involve about £3bn of the buyers' own capital plus £7bn of borrowing from the banks, so a classic leveraged buyout. Don't expect them to be in a hurry to roll out more 4G.

In France, ARCEP is marking up the score from the first year since Free Mobile launched. The impact has slashed the three historic operators' revenue by 10% while adding an additional 4.5 million subscribers and close to doubling the number of subscribers who are free of contract.

Meanwhile, Xavier Niel has gone on the record to say that the Google Ads-blocking episode was deliberately intended as a bargaining chip in their peering war.

While Alcatel-Lucent was struggling, Ericsson signed a €1bn contract to run Reliance Comms' network, and then hooked up Gemalto as a partner for M2M technology.

A huge milestone in WebRTC, says Dan York. Mozilla and Google have demonstrated voice interoperability between Firefox and Chrome without using any plugins.

Meanwhile, Voxeo's browser telephony lib, Phono, gets WebRTC support. Here's a walkthrough of how to get a WebRTC test rig going, which does tend to make clear just how new the technology is. (Hint - if you already have an Asterisk server, you can skip most of it.)

Oracle has acquired Acme Packet, maker of session border controllers, SIP servers, and things Voice 2.0, adding more telco-like capability to its products and its cloud.

Here's a good sceptical blog on telephony APIs, arguing that Twilio and Voxeo are probably category killers as far as this niche goes. We might not agree with that, but we can certainly relate to this post:

All too often what is a declining business for some is in fact a growth business for others. I sit daily with what we would refer to as "telephone companies" who bemoan to me that their voice business revenues are declining. I offer various suggestions and provide viable companies actually growing in this space. "But that would mean we would have to invest and take risk", is the normal reply. Well yes.

And John E. Karlin, who founded Bell Labs' human factors department and redesigned the telephone for touchtone dialling, has died. Don't miss the story about how he decided how long the cord should be.

Hacker News has good technical discussion of WebRTC interoperability here and here.

Ars Technica reviews the BlackBerry 10 OS, and is impressed. The Register is cautiously optimistic.

Reuters has a detailed piece on the Apple-Samsung relationship, arguing that Tim Cook and the supply chain/manufacturing side of Apple was opposed to suing Samsung and fighting the Android patent wars in general but Steve Jobs insisted.

Meanwhile, Horace argues that the drop in Apple's margins is entirely explained by higher production costs, and that Apple production costs usually fall as the company moves along a learning curve. He also looks into the business model of iTunes under its new accounting dispensation and estimates its margin around 15-17%.

Vodafone and 3 Austria have both advised iPhone 4S users not to update to iOS 6.1 due to unspecified technical problems.

12 reasons to jailbreak.

HP is trying to impose rules on its Chinese suppliers to stop them using student and other temporary labour forces.

Smart TV, chained to the remote control.

Wired reports on the turnaround of Flickr, driven by Instagram's terms-of-service fiasco, Facebook privacy dread, Flickr's new mobile app, and perhaps just the rediscovery that it was a pretty good product to begin with.

Quite apart from the privacy issues, loading your website up with third party widgets has risks - a succession of super-high traffic websites were downed this week when Facebook widgets stopped working. Similarly, advertising during the Super Bowl has its challenges.

Eric Schmidt is selling about half his shares in Google.

DVD rental firm Redbox is integrating its streaming product into the Xbox.

It costs $200,000 a day to promote your Twitter message.

Boston Consulting tries to estimate how much satisfaction consumers get from different media. Top two: books, and social media.

Monitoring the weather with EDGE attenuation data. Robert Metcalfe (as in law) on Ethernet's 40th anniversary. The first Shoreditch startup.


telco2.net | 11-Feb-2013 13:32

New BlackBerry, BT Dash for Share, Rackspace: Telco 2.0 News Review

Telco 2.0 Top Stories

[Ed. Seven weeks and counting to the brainstorm in Silicon Valley, 19-20 March 2013, and then on to our European Brainstorm, 5-6 June 2013. We'll also be at the Mobile World Congress for which we can offer discounted passes - email us at contact@telco2.net to find out more.]

It was BlackBerry Week, with the new OS and the first gadgets at last dropping. ReadWriteWeb's review of the Z10 is positive, but warns that the initial learning curve may be steep as the user interaction paradigm is radically different to older BlackBerries, Android, or iOS. The design is heavily oriented towards productivity, and tries to integrate data from apps rather than foregrounding the apps themselves. For example, you can consult a notifications feed without having to quit the app you're using.

Speaking of apps, all the shiny RIM scattered among the developers seems to have worked, as the new OS launches with 70,000 titles, of which 40% are ported from Android.

And we're not meant to call them RIM any more - the company is rebranding as just "BlackBerry". All the US national carriers wil be carrying the Z10 in principle, but as Dan Rowinski points out, you can ask several vendors about the gap between carrier support in principle and in practice.

There's more review at Ars Technica, who also promise a separate in-depth review of the OS as distinct from the hardware sometime this week. They also have a gallery of classic RIM devices.

Meanwhile, Reuters points out that BlackBerry's third biggest market is Indonesia, and a $750 Z10 is more than pricey in that context. So, is there an emerging market BB10 device in the pipeline? Nokia's Lumia 620 is coming in at £150.

More ugly results from HTC. Samsung invites journos to Monaco to play with the shiny gadgets. Horace scores Apple Q4 as disappointing. Tomi Ahonen discusses the emerging mobile OSs and plumps for Samsung and Tizen.

EverythingEverywhere may be about to float on the stock market, says Reuters, who believe that it has appointed bankers to advise on carrying out an IPO. Morgan Stanley, JP Morgan, and Barclays were said to be involved.

OFCOM, meanwhile, has proposed to let British mobile operators refarm their spectrum for 4G without many restrictions at all.

TeliaSonera's CEO has resigned after an inquiry into their acquisition of radio spectrum in Uzbekistan. The CEO couldn't adequately prove that there had been no bribery or corruption in the transaction, something which could be said of almost any transaction in Uzbekistan, especially one involving the business interests of the president's daughter like this one.

On the other hand, MTN says it's been cleared over that whole business of whether they helped Iran's nuclear programme in return for a GSM licence. More precisely, it's been cleared by a committee it set up itself; the US Supreme Court will rule later this year. Meanwhile, QTel's investment in Iraq had a good first day on the stock market.

SFR's first production LTE in Paris is on, using NSN's fancy Liquid Radio system.

Here's a progress report on the Australian NBN. Bangladesh at last gets redundant fibre. A call to make NBP mainstay Susan Crawford head of the FCC.

BT, meanwhile, is feeling aggressive. New tariffs, just announced, offer 16Mbps for £16/mo and "up to" 76Mbps on FTTC for £26/mo, with 50GB of online storage and six months' introductory free service.

They're also getting rid of their usage caps. TelecomTV quotes John Petter, MD of BT Consumer, promising that their network "can stand up to the extra bandwidth demands from totally unlimited products everywhere across the UK". Wot no exaflood of OTT video taking our jobs?

What's going on here is a sort of political business cycle applied to telecoms. Technology improves, operators invest, and then the temptation to rip out the cap and price to go kicks in. The pipes fill up, and soon the squealing begins, and we start to hear about taxing the OTTers, etc, until the next upgrade cycle kicks off and suddenly all is love again.

One thing that will certainly fill up the tubes is streaming high-definition TV, especially if it's from a live event that can't be cached and everyone wants to watch it. Like football. BT has started promoting the YouView set-top boxes heavily, to go with its new portfolio of sport, and as a result we have some first data points on the platform. So far, it's insignificant.

Sky, for their part, added 50,000 customers in the UK in the quarter, and half of them took their IPTV service. So far, 4.5 million of their 10.3 million customers have the Sky+ box, but only 1.7 million have plugged the network cable into the back of it. That's still about 1.6 million more than YouView.

Dan Rayburn reviews CBS and Akamai's streaming of the Superbowl, and finds it inadequate.

Amazon Web Services launches Elastic Transcoder, a video transcoding service in the cloud, thus getting closer to having a full-service video workflow.

Google is investigating subscription channels on YouTube, having asked some of its original content creators to have a think about what they might do for a subscription of between $1 and $5 a month.

Google has also, it turns out, been talking to the French government. The row between French publishers and Google has been going on for years - remember when AFP sued them for indexing their Web site? Now, Google has agreed to put €60m in what sounds like investments in digital publishing startups and to offer French content firms advice about how best to use Google Analytics and other products. In a sense, rather than set a precedent, Google has voluntarily pulled out some money to hush the problem.

Meanwhile, Facebook reckons its mobile revenue is up to 23% of the total.

Former cause celebre Phorm needs a rescue rights issue. The world's biggest TV.

Up in the cloud, Amazon's results were a little disappointing, although their usual weak point, margin, was up. That might explain why the shares soared on the news. Wired argues that they are growing like WalMart in the 1990s, but you have to wonder about a company with sales of $21bn and net profit of $97m.

That said, here's Jim Young of ESRI, makers of the world-standard ArcGIS mapping server, talking about running mapping and geographical information systems in the AWS cloud:

Who's building a monster solar-powered data centre in Iowa? Data Center Knowledge investigates. Here's Microsoft's latest.

OpenStack wouldn't exist if it wasn't for Rackspace. They've just published reference architectures for private clouds using hardware from three vendors on the OpenStack platform. Meanwhile, GigaOm introduces OpenFlow to the readers.

Competing with Google is tough: here's how DuckDuckGo is trying to do it, from High Scalability.

And EVE Online, as you might expect, has some pretty impressive scaling challenges. The nice thing about being an alternative universe, though, is that you can fix them by adjusting how fast time passes. If you can't do that you might want to optimise your web site for better browser caching.

Bad news for the GSMA's Voice 2.0 project, Joyn aka RCSe. Deutsche Telekom has put off deployment until further notice, citing serious technical problems, notably to do with Android fragmentation and also with interoperability.

DTAG is also operating a Voice 2.0 platform, Voxeo Labs' Tropo, as part of its Developer Garden programme. Speaking of Tropo, here's an app from their AT&T hackathon.

That said, will the explosive growth of Android make telco voice irrelevant?

Vodafone says the average duration of a call is falling.

Republic Wireless is deploying VoWLAN on a serious scale.

Now Skype is Microsoft and not really peer-to-peer, who's listening to it?

RevK says that the IPv6 consumer routers are here, but where are the VoIP phones?

What will we do with peer-to-peer LTE?

The FOSDEM conference, as usual, has a really superb Voice 2.0 lineup. Learn!


telco2.net | 04-Feb-2013 13:13

Mobile World Congress 2013 Preview: reading the CEOs


The GSMA's Mobile World Congress (MWC) 2013 in Barcelona on Feb 25-28 is a key fixture in the mobile industry. Telco 2.0 is again delighted to be official partners of the event. Not only does this mean that the Telco 2.0 analyst team will be attending in force, but also that we're able to offer our readers a special discount on MWC passes. (Email us at contact@telco2.net if you'd like one).

It's at a new venue this year, the brand new Fira Gran Via. While it's a little out of the centre of town, we're looking forward to a change of scene, and Barcelona is small enough to enjoy the centre of town in the evenings.

Apart from the allure of the city of Barcelona, we like going for three reasons.


  1. It's a great place to feel the pulse of the global telecoms industry, and we'll be analysing and reporting what we see and hear in the weeks after the Congress. We've had a look back at our analysis from the last three years below, and are reasonably pleased on the accuracy of our predictions and conclusions we drew from watching and listening to the great and good from Google, Microsoft, Vodafone, Telefonica, et al.

  2. It's a good place to do business, and we're hosting activities for a number of clients at the Congress.

  3. It's a superb opportunity to simply catch up with many key clients and friends in the industry. So if you are going, do let us know and we'll try to catch up with you.


So what happened in the last couple of years? In the rest of this article we reflect on what we read in the performances of some of the world's top technology and telco CEOs (Google, Microsoft, Vodafone, AT&T and Telecom Italia), and other highlights from Congress.

For a start, Google's Eric Schmidt gave one of the best big stage performances we've ever seen. With the benefit of hindsight, this may have happened at around the apex of the Stamford man's career at Google, and his second appearance illustrated a fascinating change in both his, and Google's, strategic approach.


Dr Eric Schmidt bossed the 2010 Congress as Google's CEO (Image: Guardian.co.uk)

Back in 2010, in How Google's Chief Magician Stole the Show, we wrote how the then CEO had in a tour-de-force performance told the telecoms industry exactly which parts of their lunch Google will eat, while simultaneously appearing to offer peace. We thought that his most revealing remark was an offhand comment about customer data, and about how much more of it that Google would have in five years time. Big customer data was of course the telcos' lunch we were referring to - the oil of the future information economy, an area we've been working on for a number of years.

Two years later Schmidt seemed like a different man when he spoke again at the 2012 Congress.


'Uncle Eric' Schmidt, Chairman, Google, at MWC 2012 (Photo: GSMA)

While still a consummate performer, in 2012 he seemed like an elderly uncle of the man who presented at the 2010 show. It may have been that Schmidt's new role of Chairman suited a lower octane style, or that his true objective was to anaesthetise the industry to the distrust it then felt toward Google. It may also have been that by then, the high intensity 16-hour-a-day CEO lifestyle that Schmidt had described as the norm for his team had taken its toll.


Steve Ballmer, Microsoft CEO, spars with the audience in 2012 (Image Source: GSMA)

In contrast, in 2011's Microsoft CEO fails to land all punches, but..., we described how the pugilistic Steve Ballmer was all fist-pumping action while making a slightly less than convincing case for Microsoft's Windows 7 mobile OS. Despite our own doubts about the near term prospects for Microsoft in mobile, we sounded a cautious note of longer-term optimism, saying that Microsoft could be back in contention within 5 or 6 years given its corporate IQ and resources.

It's still early days, but consumers and reviewers seem to have warmed to the OS at least. Recent results appear to show Apple beginning to plateau, and Samsung powering ahead, so the smartphone OS wars are far from over. Operators still have the strategic need to nurture more than two smartphone ecosystems as we pointed out in Dealing with the 'Disruptors': Google, Apple, Facebook, Microsoft/Skype and Amazon, so Microsoft is still in the game.

The motivations and contrasts between the outwardly composed and cerebral Schmidt and the combative Ballmer, and indeed the emotional tone and temperature of all of the CEO performances we watch, are always among the most interesting aspects of the Congress. CEOs are, after all, the centre of something akin to a company's 'ego' - the embodied expression of what it collectively believes it is and should be doing.


2012: Bernabe, de la Vega, Colao: "MTRs - funny how?" (Image: Stephen Shankland/CNET)

In the case of the 2012 opening addresses of the CEOs of Vodafone, AT&T Mobility, and Telecom Italia, we noted a slightly comical 'Goodfellas' tone, giving the impression of powerful gang bosses addressing peers at a fraternal gathering. The President of China Mobile, in contrast, simply spoke in Chinese: the clear message being 'now you must come to us' - as well as some intriguing thoughts on its vast mobile platform. We also reported on Apps & Devices, Network Technologies, M-Commerce, and Facebook's somewhat content free appearance.

So we look forward to the star turns and content of the MWC 2013 agenda, and what it all tells us about the state of the industry. There are some interesting speakers there this year, though notably, no heavyweights from Google or Facebook, and of course nobody from Apple, which has infamously always eschewed public appearances at the Congress. On the non-telco side, Deezer, Dropbox, Foursquare and Viber will be there, and the telco C-Level line-up is strong, so there's plenty to look forward to.

And perhaps we'll see you there too - email contact@telco2.net if you'd like to know more about the special discounted passes.


telco2.net | 31-Jan-2013 10:47

Making More Money in M2M: The M2M Service Company

Machine-To-Machine (M2M) has many potential applications with big benefits to end-customers, but how do suppliers including telcos make enough money to make it worth investing in? Here's a preview of a new M2M business model we're working on, the 'M2M Services Company', based on an approach successfully used by energy and IT companies to share end-customer productivity gains. This preview includes an example use-case.

We'll be publishing a more detailed research report on this approach soon, and also discussing M2M and the 'Internet of Things' in-depth at our Silicon Valley Executive Brainstorm, 19-20 March, San Francisco. If you'd like to contribute or find out more, email us at contact@telco2.net.

M2M - where's the money?

For telcos, M2M ARPUs are low, and are also being eroded, like ARPUs across the industry. M2M used to be thought of as the next SMS, a business with potentially huge scale and high margins on relatively undemanding traffic volumes. But it's turning out to be a rather disappointing generic ISP product. So, more recently, operators have been increasingly keen to substitute value from bulk telecoms products with value from software and managed services, providing service enablers that help the customer deploy and manage the device fleet.

However, few operators have any illusions about being providers of compelling software. In most cases, with the notable exception of Telenor, they have had to partner with third-party developers such as Jasper Wireless and Pachube. So that's a partial solution to the problem, but at the cost of sharing some of the revenue and losing much of the potential for differentiation.

So what else can be done?

M2M: like selling cosmetics or selling hope?

Charles Revson, the founder of cosmetics giant, Revlon once famously said: "In the factory, we make cosmetics. In the drugstore, we sell hope."

In M2M, operators have traditionally tried to sell the equivalent of 'cosmetics' - something that makes sense to operators, such as SIMs, gigabytes of data traffic, or bundled messaging tariffs. Whether it was a sheep, for Telenor, an Amazon Kindle for Sprint or Vodafone, or one of these baggage-tracking devices that SMS you their location, it worked a bit like that.

But here's a question: how many M2M customers actually want "SIMs", "modules", "data", or "connectivity"?

Consider this other famous remark by the US energy-efficiency pioneer Amory Lovins:

People don't want energy. They want cold beer.

Energy, as such, isn't particularly useful. It is only valuable because of the work that can be done with it - for example, cooling the beer. M2M is very much like that: its customers typically have business requirements that don't have very much to do with telecommunications, but which do depend on telecoms. What if they were offered the solution to their business requirement, rather than just the minutes of use?

An Innovative Business Model in Energy

In the energy sector, people began doing just this at the end of the 1970s. A company called Time Energy, which makes timers, thermostats, and other controls, noticed that the biggest challenge for their sales force was convincing the customer that they really would save substantial amounts of money on their energy bills.

They came up with an elegant solution: offer the goods free, in exchange for a share of the savings. More precisely, Time Energy would offer 100% vendor financing and the customer would pay them back at a rate based on the reduction in their energy expenses. However you cut it, Time and the customer shared in the reduced energy costs, and the customer didn't have to put any money down up front. It's hard to say no to free.

This business model was later developed into the energy service company or ESCO, which applies the same idea to a broader selection of energy-related products and services. Some projects even include deeper re-engineering of production processes, or include the option to take the customer's share as a lump sum. IBM extended it into the IT sector, applying it to major enterprise computing projects.

What if the same approach was applied to M2M? Most M2M projects are all about some kind of cost reduction or productivity gain in a business process. Quite often, they involve energy saving, but that's not necessary.

The approach could:


  • Use the power of free to sell the project

  • Share in the underlying productivity gain

  • Create sticky customers

  • Make M2M more of a "SMS-like business"

  • Make practical use of big data


Data is the Key to New Business Models in M2M

The ESCO experience shows that data is critical to the business model. Typically, it's necessary to carry out a careful energy audit of the customer premises in advance in order to estimate the potential energy savings (and therefore revenue) and to cost out the job. Then, after closing the deal, it's necessary to come back and measure the effects, in order to settle the bills and to guarantee quality. In a M2M service company project, data will be on the front line. Whatever the metrics are, it will be critical to master the data in order to make it all work.

Analysing the success factors for such a business, we identified two axes, one of scale and one of "data legibility". Some projects - the ones in the "zone of gold" on the chart - have good data and a big payoff. These are likely to get done in-house, and therefore they aren't really available to operators. Some have terrible data and are tiny, and therefore can be safely ignored.

But there are two groups of opportunities we see as ideal for the M2M service company model: ones where the benefit is clear, but the data isn't good enough, and ones where the data is there, but the individual project size is too small to be worth doing. We can get at the first group through better M2M data collection and analytics. We can get at the second through aggregation and financing.

Example Use Case: UK Rail

Here's an example. In the UK, train leasing companies acquire and maintain trains for the UK railways' train operating companies and the Department for Transport (Rail). Today, it is typical that the contract between DfT(R), the TOC, and the leasing company specifies a number of "diagrams" - roughly, a diagram is one train-movement - rather than a number of physical trains. This means that a major opportunity exists for the competitor who can maximise the amount of time the trains spend on the line, thus both making the service more efficient and reducing the number of trains they need to buy.

Collecting live data from instrumentation on the trains could make it possible to bring them in for maintenance on an as-needed or predictive basis, rather than on a schedule, and therefore improve their operational efficiency. (Similar projects exist for Rolls-Royce jet engines, for example.) An M2M service company could take on the project, supplying the hardware, the service enablement, the connectivity, and some or all of the data work, in exchange for a share in the gains from improved availability and on-time running. As there are numerous TOCs, leasing companies, and M2M applications in UK rail, such a company might even aggregate more projects and become a sector-wide platform.

That could, in turn, create opportunities for new and creative re-use of the data resource.

Next Steps

We'll be exploring this and many other aspects of M2M and the 'Internet of Things' in-depth at our Silicon Valley Executive Brainstorm, 19-20 March, San Francisco. We'll also be publishing a more detailed research report on this approach soon, and also offer private workshops to help companies explore and develop effective strategies and roles in these important and evolving fields. If you'd like to find out more or contribute to our programme, email us at contact@telco2.net.


telco2.net | 21-Jan-2013 13:15

Sprint-Softbank: how it will disrupt the US market


The Japanese and French markets have both been disrupted through the entry of low-cost competitors offering substantial price reductions. We argue in our new report that Softbank's acquisition of Sprint is a signal that the same is to soon come in the US given Softbank's experience as a successful disruptor in Japan. (More here)


Figure 3: Softbank - keeping ahead of the competition


Source: Softbank, STL Analysis

telco2.net | 18-Jan-2013 13:10

The Internet of Things (IoT) Vs. M2M: what is the real opportunity?

Machine-to-Machine (M2M) and the Internet are two very different worlds that are rapidly colliding, bringing life to a new phenomenon - the Internet of Things (IoT). Still in its infancy, this much-hyped opportunity has significant growth potential but it has experienced a series of false dawns.

Telcos, vendors and a diverse range of other companies are all trying to position themselves in this rapidly developing, yet confusing and uncertain space. What are the key differences between M2M and IoT? How fast will the industry really grow? Where are the opportunities and how can they be monetised? Where are the constraints and how can they be addressed? Below, we attempt to demystify some of these key questions.

M2M and IoT: Stripping the facts from the hype...


M2M is regularly used interchangeably with the 'Internet of Things,' although the two are not identical. The Internet of Things is about connecting everything - people, objects, machines - to the Internet and could be considered a vision, as today's applications are only the 'tip of the iceberg' of its potential. Despite recent questions around the accuracy of many forecasts, many commentators are predicting billions of ever-smarter devices (sensors, gizmos, health monitors, even toasters!) connected to an open-standard, public infrastructure. Originally coined to describe the long-awaited and eventually failed arrival of ubiquitous RFID technology, the IoT is now expected to be composed of far more powerful actively connected "things."

Machine-to-Machine (M2M), on the other hand, implies vertically integrated technologies that allow typically 'dumb' sensors to relay limited information. The phrase M2M is commonly used by mobile carriers who have traditionally envisioned leveraging their global cellular networks to provide basic connectivity for "closed" solutions with limited "windows" outside these silos. However, although operators understand that the value lies in services above pure connectivity, only a few are exploring and implementing these strategies.

STL Partners views the Internet of Things vision as current M2M technologies and the Internet coming together

Source: STL Partners

The IoT is likely to deliver a wider scope and complexity than pure M2M, providing a greater range of challenges that Telcos and other players are more able to solve. However, despite many strong (possibly unrealistic?) forecasts, the IoT has a history of false dawns and missed opportunities, especially due to inadequate standards within this space.

How can operators provide solutions to key problems within the Internet of Things, beyond basic connectivity and allow the industry to grow? We think that one important answer is COLLABORATION" - operators should leverage their trusted & powerful brands and national infrastructure to remove chaos within the IoT and create open standard capabilities and services that the entire global industry can adopt.

There are currently over 100 different M2M/IoT platforms in the market, according to Beecham Research - surely this is creating unnecessary chaos and confusion? Some companies have already realised this, e.g. NTT DOCOMO, an operator that traditionally develops its own service platforms, has joined an alliance that offers global M2M services over Jasper Wireless's platform. If this collaboration trend continues, maybe the predictions for billions for connected devices will, in fact, become a reality.

There are many other IoT opportunities for operators and other companies without the requirement of collaboration. For example, there is currently no clear method for controlling personal data around the IoT, therefore 'trust networks' to govern privacy could be developed. The 'IoT platform-play' is also a key area where operators can leverage their assets. For example, Deutsche Telekom has created 'Marketplace' where buyers and sellers of M2M hardware, software, apps and full end-to-end solutions can meet in one single place.

How to spot and take IoT opportunities for your business

STL Partners run bespoke workshops that demystifies the IoT opportunity for your company, and identifies, develops and prioritises the key initiatives to move forward into this rapidly developing space. Click here to learn more about our IoT workshops.

Additionally, the New Digital Economics Executive Brainstorm & Innovation Forum, taking place in Silicon Valley in March 2013, will be running a day session on the "New Opportunities from the Internet of Things." Click here to view the agenda.

If you are interested in either the Opportunities Workshop or the Silicon Valley Executive Brainstorm & Innovation Forum and would like more information, please email STL Partners on: contact@stlpartners.com


telco2.net | 16-Jan-2013 12:21

FTC bites Google; Facebook Voice cometh; Whatsapp +75% / qtr - Telco 2.0 News Review
  • Google: FTC vs. Google: the decision is in
  • Voice 2.0: Facebook voice messaging is here, Tropo comes to AT&T
  • Broadband Connectivity: YouTube peering - Free vs. Google vs. Cogent, Free launches ad filtering
  • Smartphone Roundup: Samsung Q4 profits up 65%, HTC down 91%, CES roundup
  • Online Video: YouTube data cleaning stuns Sony
  • Cloud Computing: Amazon Christmas Eve outage - the crash investigation

[Ed. Diary note: it's just over two months to the brainstorm in Silicon Valley, 19-20 March 2013, and then on to our European Brainstorm, 5-6 June 2013. We'll also be at the Mobile World Congress - email us at contact@telco2.net to find out more.]

Google vs the FTC: the decision is in. The US Federal Trade Commission ordered Google to stop screenscraping specialist search providers who opted out of integration with Google search, to change its terms of service for AdWords in order to let advertisers integrate the API with other advertising products, and to comply with FRAND requirements on Motorola's patent portfolio. Google has to report on its progress to the FTC Compliance Division within 60 days. Politico reports on the $25 million lobbying campaign Google staged in Washington.

The FTC action on patents, though, does make you wonder how worthwhile the Motorola Mobility buy was, especially now Google has sold the Motorola home solutions business and closed or sold off much of Moto's manufacturing. Interestingly, one of the buyers, Flextronics, is looking at moving production back to the US.

During the second world war, British spies discovered that they could use the serial numbers on German tanks to estimate the total production run, the monthly run-rate, and the distribution of production between factories. The XDA-Developers crowd adapted the trick to do something similar with Google's LG-manufactured Nexus 4, demonstrating conclusively that the Google flagship phones and tablets are only produced in small quantities, and that the order-to-shipment cycle is about three days.

Top German app developer meets the Nexus 4 and gives up on iOS. Matt Asay thinks Google is "the mobile company of 2012 and 2013".

Elsewhere, Facebook is testing a new voice feature. You may remember that back in 2010 we predicted that Facebook would look to move into core communications, and again to support our top valuation of $30bn in 2011 (to which it is increasingly nearing, having started at over twice that mark). Interestingly, Facebook has gone with a messaging/voicemail rather than a telephony paradigm. You click to record a message that then gets pushed to your friend - similar to the existing "Poke". There's also a more call-oriented feature on test, only in Canada so far. It's amazing, apparently.

Voxeo Labs has snagged its biggest gig yet - AT&T's new call management API is actually Tropo under the bonnet, rather like the voice features in DTAG's Developer Garden.

Meanwhile, WhatsApp hit 7 billion inbound messages a day, showing 75% growth in the quarter.

And here's a HOWTO on using Twilio with MailChimp and Netsuite CRM to create an integrated e-mail/voice/web marketing campaign and report data from it.

Over at Yahoo!, ad sales gets a new boss, and reorganises to mimic Google, while the redesigned homepage begins to ramp up.

The first peering war of 2013, or something more interesting? Dave Burstein thinks Free and France Telecom are demanding paid peering from Google or possibly Cogent.

What seems to be happening is that Free users are complaining about YouTube videos loading slowly. Free seems to peer with Google, but not with Google's YouTube-specific network, and its main transit provider, Cogent, doesn't peer with a Google-run network that provides YouTube peering for large transit providers. Cogent has a long history of peering rows, brought about by its highly aggressive pricing policy, and it seems that they've sold capacity they can't provision.

But why don't Free and YouTube just peer? Well, Google has lots of peering capacity, just not in France. So why not? It's been suggested they don't want to create too much infrastructure in France, in case their presence would no longer be considered just a "representative office" for tax purposes. By comparison, there are no fewer than 10 locations in London where Google peering is available. Reaching them wouldn't cost Free that much, seeing as they already peer at the LINX, but perhaps Cogent "quoted them happy" and offered a price so low as to beat that option

Then, the story took a new and interesting twist. A software update to Free's Freebox Revolution set-top box has been pushed out that filters advertising out of web pages as they cross your home router. Actually, it's simpler than that - it looks like the local DNS resolver has been updated, pointing ad-serving domains to localhost. Free points out that using Adblock Plus is perfectly legal, so why not this? Hitting ad revenues is certainly one way to get Google's attention.

Elsewhere in France, SFR said it would invest $2bn this year. The Register reviews UK femtocells. OFCOM prepares a consultation on price changes during contracts. Sprint offers an unlimited prepaid plan. Deploying a network in a suitcase.

Samsung's Q4 estimates show a profit of $8.7bn, with Galaxy Note II sales possibly already reaching 8 million. That would mean profits were up 65% year on year. On the other hand, HTC's Q4 profits were down 91%, crashing through the forecasts. At this rate, it could be a lossmaker by the summer. The CEO said it wasn't so bad and the problem was marketing. ReadWriteWeb points out that's what RIM said, and unlike RIM, HTC doesn't have a major new technology in the offing.

Horace reckons the featurephone will die by 2015, with the US going 80% smartphone by 2014.

Will this be the most boring CES ever? It's not that bad. NVIDIA announced the LTE, quad-core Tegra 4 chip and demonstrated an Android-based portable games console/phone/multimedia device with high-def audio, 720p video, and the ability to stream gaming visuals to a 4K TV over HDMI.

A neat M2M application: the gadget you put in your bags so you can find out where the airline sent them. The manufacturer partnered with a small US GSM operator to get access to their roaming agreements. And it knows when the plane takes off from its accelerometer.

A clever dynamic QoS WiFi router. A USB stick that plugs into your laptop so you can control it with your eyes.

Lenovo offers a huge, 27" touchscreen all-in-one "table computer" intended for group use.

Here's the first sight of Ubuntu Linux on a smartphone - more details are here. The controversial Unity GUI looks rather good in the mobile context.

Meanwhile, JP Morgan revises down its estimates on Microsoft. Samsung promises Tizen shiny by this year's MWC, and sells more Chromebooks than you might expect. How much does patent peace cost? $50m, between RIM and Nokia. You may wish to be sceptical of market-share estimates based on ads.

If you don't clean up the data, you might discover something like this: Sony and Universal Music's YouTube channels suddenly saw their view counts drop by 2bn over Christmas. Cue much conspiracy theorising.

It turns out that Google decided to implement an adjustment to remove spam from the count, but that only accounted for a tiny percentage of the total. The big change came from a data cleaning exercise that removed videos that had moved to the VEVO channel.

Usually, when it's CES time, there's a barrage of "smart TV". This year, not so much. It's been more about relatively small, useful improvements. Google announced that Android users can stream YouTube videos to many more TVs from within the app.

Roku signed up a string of partners for its Roku Streaming Stick, a USB device that plugs into a TV and turns it into a Roku.

And here's a joint BBC Research and Google call for papers on TV UX design.

In the cloud, here's the AWS crash investigation into the Christmas Eve outage. A telling question: why don't you run it on your own hardware, it's so much cheaper? And scrapping a supercomputer.


telco2.net | 07-Jan-2013 12:48

Mobile Commerce: MEF Webinar TODAY - Global Survey Results


MEF's Global Consumer Survey 2012 questioned 9,500 mobile media users in ten countries: US, UK, China, India, Qatar, South Africa, Mexico, Brazil, Indonesia and Saudi Arabia. You can download the executive summary over on our research site here - there's also a special 30% Telco 2.0 discount code on the full report.

The MEF Research

The 2012 behavioural and usage study digs deep into consumer trends and attitudes, providing insight and analysis on their wider industry impact with mobile content and commerce broken down into three distinct activities:

  • Purchase - digital or physical goods
  • Research - using the phone to support product/purchase research
  • Banking - transaction or accessing bank accounts

The 60 page global report delivers insight that can help both mobile specialists and those who are new to mobile to develop targeted mobile strategies and fully exploit the rich opportunities that mobile provides.

Webinar, Events, and Free Summary

There's also an MEF webinar on Wednesday 28th November 2012 (11AM GMT / 12PM CET / 1PM South Africa / 2PM Qatar / 4.30PM India / 7PM Singapore - register here) and we'll be looking at M-Commerce in our upcoming brainstorms in Dubai (3-5 December 2012), Silicon Valley (19-20 March, 2013), and London (5-6 June, 2013).

[NB. MEF is the global community for mobile content and commerce, the leading global trade association for companies wishing to engage consumers and monetize their goods, services and digital products via the mobile connected device.]


telco2.net | 28-Nov-2012 11:55

Big Data: Big Theme at Digital Asia


Big Data is a big theme at our Digital Asia 'executive brainstorm' next week (3-5 Dec) in Singapore, taking place at the wonderful Capella Resort on Sentosa Island.

Last month we were in Dubai for our Digital Arabia event and then the World Economic Forum's Summit on the Global Agenda, as a member of its 'Data-Driven Development' council. We'll be taking the Big Data learnings from these events, along with latest European Union developments on this topic, to Asia for the first time next week.

Not that Asia is behind the curve. We're delighted to have MIT's Senseable Cities lab stimulate the debate with its Live Singapore! project ("The Real-time City is now Real"!), along with leading players like Unilever, Google, Amex, Singtel and others describe and discuss how they are looking to leverage data.

As a warm up, here's a video about the 'Real-time city':


telco2.net | 27-Nov-2012 19:41

Cloud 2.0: Telstra, Singtel, China Mobile Strategies


We've just published an extract from our upcoming report 'Cloud 2.0: Telco Strategies in the Cloud', which outlines the key components of Telstra, Singtel and China Mobile's cloud strategies, and how they compare to the major 'Big Technology' players (such as Microsoft, VMWare, IBM, HP, etc.) and 'Web Giants' such as Google and Amazon. See here for more.

The report's lead author, Bob Brace (ex-Vodafone Head of Cloud) will be discussing our findings at Digital Asia next week, 3-5 December, Singapore.


telco2.net | 26-Nov-2012 06:38

Smart Steps: Telefonica Digital cracks open the data pile

Remember this Telco 2.0 blog post from way back in 2008? And even this one from 2007? We've been arguing for years that the operators' data resources are a major opportunity, and more recently we've been participating in efforts to solve the privacy, security, and operational barriers to making use of it through the World Economic Forum's Personal Data Ecosystem project.

So, what about some implementation? After all, implementation is the subject of a major forthcoming Telco 2.0 strategy report.

We've often written about Telefonica, especially about the BlueVia developer environment, their wholesale CDN product, their efforts to diffuse innovations between their European and Latin American contexts with Wayra, the highly successful O2 Media advertising unit with projects like Priority Moments, and we mention their partnership with Joyent for mobile-optimised Node.js hosting in the cloud in our forthcoming Cloud 2.0 Strategy Report.

Telefonica Digital, the integrated business unit that holds all their Telco 2.0 projects (there's a good overview here - note the focus on spreading successes like O2 Media from the UK to Brazil), has just launched a new data product, Smart Steps.

Smart Steps is a mapping tool that shows levels of footfall, dwell times, flows, and other data about how O2 UK subscribers move around British cities. It provides crossbreaks of the data on various demographic factors, and provides for like-for-like comparisons. The target markets are retailers, stadiums, event organisers, transport operators, and government.

There's a video here.

Note that they're not falling into the trap of thinking that data = advertising. There's much more that can be done with data than just trying to get people to click on ads, and with the kind of cost per click that even Google is getting these days, there are probably more profitable things that can be done with it. They're also marketing the tool through a partnership with market research firm GfK, showing the need for the right channels to market.

And he data view, and the tool, are designed to aggregate out personally-identifying information. They describe it as being "about crowds, not individuals" - a good sound-bite summary of how to make use of personal data in itself. It's important to avoid the traps of overtargeting, oversharing, and overcomplicating.

We recall a presentation from dunnhumby, the company responsible for one of the most successful data operations ever, Tesco Clubcard, at one of our events - surprisingly, the vast quantity of data collected by Clubcard was used to classify customers into as few as eight groups. The beauty of this is of course that they were the right eight groups, the ones that captured useful insights into customer behaviour.

We also wonder if the data set that underlies Smart Steps might be the one generated by Priority Moments. As the users who opt in to Priority Moments check in at venues and shops, and they also use O2's WLAN hotspots, they generate a lot of location-based information that's specifically retail-related. Now that's a two-sided business model.


telco2.net | 21-Nov-2012 13:19

The Brutal Future is Here: Europe's woes hit Voda and Telefonica

In our recent European Mobile: The Future's Not Bright, It's Brutal Executive Briefing, we predicted that European operators faced a grim future.

Even in the UK and Germany, the markets with the brightest future, STL Partners forecasts a respective 19% and 20% decline in mobile core services (voice, messaging and data) revenues by 2020. The UK has less far to fall simply because the market has already contracted over the last 2-3 years whereas the German market has continued to grow. We forecast a decline of 34% in France over the same period.

In Italy and, in particular, Spain we forecast a brutal decline of 47% and 61% respectively. Overall, STL Partners anticipates a reduction of 36% or €30 billion in core mobile service revenues by 2020. This equates to around €50 billion for Europe as a whole.

Like the medical profession, we don't always like being correct when our diagnoses are pessimistic. So it is with some regret that we note that our forecasts are being borne out by the latest reports from from southern Europe. Vodafone has been forced into a loss for H1 2012, after it wrote down the value of its Spanish and Italian OpCos by £5.9bn. Here's why:

The writedown is of course non-cash, and those of us who remember Chris Gent's Vodafone will be familiar with the sensation. But the reasons for it could not be more real. Service revenue has fallen sickeningly, down 7.9% across Europe, 1.4% groupwide.

See the rest of our detailed analysis in full on our research portal. It includes analysis of Telefonica's results as well as Vodafone's.


telco2.net | 16-Nov-2012 09:28

Telcos in the Cloud: 3 strategy groups and 3 future scenarios


We've just published an extract (see here) previewing our upcoming report 'Cloud 2.0: telco strategies in the Cloud', which outlines the three main groups of telco cloud strategies the report identifies (Hunters, Gatherers and Innovators), and three future market scenarios (Cloud Layers, CloudBurst and CloudFail).

This extract is a sample of the larger research project, and an extract / preview of the Telco 2.0 presentations at the upcoming Digital Arabia and Digital Asia Executive Brainstorms (Dubai, 6-7th November and Singapore, 4th-5th December 2012). Please email contact@telco2.net or call +44 (0) 207 247 5003 to find out more.


telco2.net | 02-Nov-2012 12:29

Windows 8 tablets, with Skype! Cloud-based CDN, Ruckus IPO, Apple Q3s: Telco 2.0 News Review

Telco 2.0 Top Stories

(Ed - Apply to join us at Digital Arabia in Dubai, 6-7 November, and Digital Asia in Singapore, 3-5 December. The agendas cover Digital Economy, Digital Commerce and Digital Entertainment in each region, and there's a great line up of top-notch stimulus speakers from Du, Mobily, Etisalat, Singtel, Globe, Qtel, Telecom Indonesia, Google, Amex, Unilever in addition to Telco 2.0 analysts.)

Microsoft Windows 8 is here. AnandTech has a 12-page monster review of the Surface hybrid tablet, while the launch event in China went rather badly after someone disrupted the show and the OS didn't work well on the PCs as opposed to the tablets. Gizmodo liked the hardware but not the software. Critical comment is here. Ars Technica has another deep dive into the Win8 architecture, a review of its multimedia capabilities, and a visual tour of the GUI.

On the other hand, Cult of Mac reports people queuing outside the shops for the gadgets, a turn-up for the books with regard to Microsoft products.

Nokia has made a start on diffusing Windows Phone into the mass market with the Lumia 510, a Qualcomm Snapdragon-based smartphone priced at $199.

The launch of the Surface gadgets brings with it something new - Skype for Windows 8 is here, and VentureBeat is seriously impressed with the design and integration. Here's some video:

Voxeo has just launched Ameche, a cloud-based Voice 2.0 platform that's meant to provide "apps in your calls". Dan York is impressed. The service runs in Joyent's node.js cloud, which is interesting when you remember that Telefonica Digital is a Joyent partner. Hence, chart of the week:

Meanwhile, Sprint brought back PTT functionality as an app for Android devices, providing PTT between enrolled devices and also with the installed base of Direct Connect users.

Telefonica added TokBok's video conferencing API to Bluevia this week.

Facebook's Q3s are out, showing a $59m loss. This isn't quite as bad as it sounds, as a lot of stock options have to be accounted for, but it's not the barn-burning business blitz the IPO promised either. 14% of revenue apparently came from mobile users.

The Google was meant to be staging a huge launch this week, but Hurricane Sandy had other ideas. The event will stream here, but part of it had already leaked via Carphone Warehouse's Web site, which was already advertising the Nexus 4 phone.

Wired rounds up the leaks and notes that Vic Gundotra of Google has been posting beach photos taken with a "Nexus 10" tablet. Meanwhile, history repeated itself as one of the Nexus 4s was accidentally left in a bar, kicking off a race between bloggers and Googlers to retrieve the precious device. Cynics might suggest this happens too often to be chance.

Meanwhile, Google decided to shut down Motorola's old Chinese R&D centre, and it looks like the result was a hiring bonanza for Lenovo. Rather than set up distributed research centres, the ThinkPad people decided to concentrated on Nanjing and absorb as many of the ex-Moto people as possible.

Is Google's ad volume actually growing fast enough to outweigh falling CPC numbers? Wordstream reckons so. Note the completely pointless infographic - at least you can copy the numbers off it into a spreadsheet.

The UK's m-payments JV, Project Oscar, has got a brand and it's as hipstery as you might have guessed. Interestingly, the carriers behind it are also looking at a different business model, and downplaying the dreaded three letters "NFC".

In the cloud, here's a great Ars Technica piece on CloudFlare's cloud-based CDN, how they use the tools of the cloud to deploy and scale, and how anycast IP makes their CDN work.

Bytemobile reckons that mobile data rates drop 30% in the evening peak, if you're looking for motivation to get into CDNing.

Meanwhile, Google App Engine had a major outage, flattening a range of popular Web sites.

The competitive impact is likely to be minimal, as Amazon Web Services also had a major outage, affecting Elastic Block Service customers. EBS, which emulates direct access to a hard disk, seems to be AWS's bullet magnet, having borne the brunt of a succession of outages over the last 18 months. As requests to the failed EBS machines piled up, though, the problems cascaded through the system and eventually affected the RDS database server, EC2 virtual machines, and the ELB load-balancer, which many customers use to manage the effects of outages.

Amazon's typically forensic crash report is here.

High Scalability blogs a fascinating talk on Google's new Spanner database system, and also covers an interesting project to instrument AWS.

The results suggest that the best-performing Amazon data centre is Sao Paulo, probably because it's the newest, and in general, disk I/O operations in AWS are best kept to a minimum. Is that a pattern?

HP claims it has 2000 customers on its public cloud in beta.

Facebook's big event also got weathered out by Sandy, but it's the launch of Facebook Gifts, as pre-announced a while back. Meanwhile, the King of Sweden visited their huge new data centre in subarctic Lulea. It's good to be king. They say.

Wi-Fi star Ruckus Wireless is going for an IPO, and The Voice of Broadband has a read-out of the S-1 filing. Note that 308 out of 559 employees work in R&D.

Teresa also has a write-up of Broadband World Forum. Who knew the Internet made up more of the UK's economy than any other G20 country?

Nokia Siemens Networks picked up another 3 TD-LTE networks from China Mobile.

MTN reported strong subscriber growth, 3.8% year-on-year. EverythingEverywhere reported revenue down 3%, blaming MTR cuts. 74% of its subscribers are now on smartphones. Telenor's revenues were up 3%. Clearwire's TD-LTE roll-out has been slowed down to align the deployment with Sprint's. China Unicom and Telecom pulled ahead of China Mobile in subscriber growth, but mainly by expensively throwing iPhones at the problem.

More network-sharing: Telefonica's O2 Germany x E-Plus.

Will prices rise in France to fund LTE? France Telecom hopes so. They would. Critical comment on the UK LTE tariffs.

China Unicom has replaced a Cisco backbone router, citing "security concerns".

99.5% of peering agreements are on a handshake basis.

Horace scores Apple's Q3 numbers and considers them adequate but disappointing. He argues that the iPad figures were rather poor, and that this is probably explained by the run-down of inventory ahead of new devices. However, the figures on a sell-through basis, rather than a shipments basis, were much better.

iPhones sold better than expected (so much for the tech-news "it's a disappointment" talk). A bit more here.

Is the smart TV user experience really as bad as Microsoft Bob? That said, we met a huge new Samsung smart-teev at the weekend and it wasn't so much the design as the absence of design that stood out...


telco2.net | 29-Oct-2012 12:41

Big Data 2.0: Data Protection regulations 'need better balance'


This blog post was written by Simon Torrance, CEO of the Telco 2.0 Initiative, reflecting on a meeting of the World Economic Forum on 'Big Data, Personal Data and Data Protection' that took place in Brussels with EU representatives and others last week. He notes significant positive developments in richer understanding of this complex topic and describes the potential role that telcos can play.

Simon will be sharing key insights on personal data and digital commerce at the invitation-only New Digital Economics Executive Brainstorms in Digital Arabia in Dubai, 6-7 November, Digital Asia in Singapore, 3-5 December, 2012, and in subsequent brainstorms in Silicon Valley and Europe in 2013.

Last week I took part in the World Economic Forum's (WEF) Personal Data workshop in Brussels, along with 70 executives from Europe and the USA representing organisations such as Allianz, AT&T, BT, Deutsche Telekom, the European Commission, the European Parliament, Facebook, Google, Intel, Microsoft, OECD, Novartis, Renault, UPS, Visa and various experts, professors and consumer rights and civil liberties groups.

The workshop is part of a regular series of meetings that the WEF runs around the world (the last one being in China last month), focusing on how to 'unlock the value of personal data: balancing growth and protection' and part of its new 'Data-Driven Development' project.

As a member of the WEF's 'Re-thinking Personal Data' project team and their global ICT Agenda Council for the last 2 years, it was heartening to see that the debate is moving on much more quickly with more important bodies involved. Things have come a long way since February 2010 when we ran our first 'Privacy 2.0' event in Boston with MIT and NSN, through which we first connected with the WEF. Output from our recent workshops this year in San Jose and London have helped to direct and push forward the debates.

San Jose workshop in action (one of the Business working groups)

Those who have followed the Telco 2.0 Initiative will know that we have been talking about the unique, but latent, value of telco 'customer data' for at least four years now. The WEF's project has given the subject greater importance, as it places 'customer data' (data that a company has about its customers which it tries to mine and analyse to serve them better) within the context of the bigger concept of 'personal data' (data that we as individuals automatically generate as we go about our daily, digitally connected lives).

PERSONAL DATA - 'A NEW CLASS OF ECONOMIC ASSET'

The World Economic Forum believe that personal data is potentially a new class of economic asset (the new 'oil' or 'currency' for the digital age) and that individuals, as producers of this asset, should have access and control rights to it. Today most individuals have very little appreciation of what they are generating, nor the potential value of it - to themselves, the private and the public sector.

Like any asset - oil, money, water - it only becomes valuable if it can be distributed and exchanged and done so within a set of protocols and practices that are trusted and adhered to internationally. Currently no 'infrastructure' - legal, technical and commercial - exists for the safe and trusted exploitation of personal data.

The laws that govern the use of personal data (influenced by 30 year old OECD principles related to privacy and data protection) cannot keep up with pace of technological change and new forms of human behavior enabled by it (e.g. Facebook usage and location-based services).

And so, we are potentially stuck in a situation whereby 'Big Business' wants to take advantage of 'Big Data', consumer and civil liberty groups lobby government to restrict their abilities to do so ('do not track'), and governments create laws with the potential unintended consequences of stifling commercial innovation (and thus economic growth).

This vicious circle restricts personal data from realizing its full potential in terms of societal benefits (contributing to better healthcare outcomes, democratic engagement and traffic reduction for example) and consumer benefits (cheaper, better, more personalized products and services).

At the WEF's Brussels workshop we heard plenty of great examples of both sets of benefits that are real today all round the world.

PROPOSED EU APPROACH - GOOD NEWS

The good news, though, is that now, at last, these issues are recognized at the highest levels. I was very heartened to hear on Monday members of the European Parliament in charge of data regulation admit that the proposed new EU Data Protection regulations which are currently in review phase were "too blunt", that they needed "adjusting to suit local needs", that they "needed to find a better balance between supporting business innovation and protecting the consumer".

This realization is a major step forward in addressing the legal part of the golden triangle of issues: regulation ('rules'), technology ('tools'), and commercial models ('money').

The technology aspect is perhaps the least challenging of the three - big steps are already being made into how to embed rights and permissions into the data (a key enabler of the free movement of data across storage silos, topic domains and geographic jurisdictions) and the secure management of the data.

Interoperability of digital identities is another important technical enabler, and effective standards for this should be achievable if the right technologists sit together to work it through.

COMMERCIAL MODELS ARE TRICKY

The commercial models are trickier, because they rely so much on the two other aspects being in place.

For telcos we believe there is potentially a unique role to play in this emerging marketplace: to act as custodians of individuals' data, proactively helping them manage and exploit it through personal data services. At our events around the world we have tested these ideas and most delegates agree with the proposition.

Some telcos have taken the first steps towards this. Telefonica for example is piloting a project in the UK to allow its customers to view the data it holds on them. The aim is to create 'transparency', the first step in gaining greater levels of trust with their customers.

Orange has a similar general philosophy, but has chosen to start (publically at least) by making certain data available to support public sector social causes in emerging markets via a project called Data4Development.

Others, like Verizon Wireless, have set up new business units to leverage telco data to support of third party marketing.

Telco 2.0 believes that there is a significant strategic opportunity for telcos to take a leading role in helping the world take advantage of this new class of economic asset. In fact at a World Economic Forum strategists meeting last year, it was rated as 'the most important strategic opportunity' for telcos in the future, per the chart below.

The Telco 2.0 Initiative will continue to explore how telcos can turn this vision into practical reality. (Some background videos on the topic here. For more information, do contact us).


telco2.net | 16-Oct-2012 16:05

Brutal future for Euro Mobile; Telenor + Telefonica; Sprint + Softbank; shrinking PC market - Telco 2.0 News Review

Is the industry facing a brutal future in Europe? New Telco 2.0 analysis says that Europe as a whole will drop by 50Bn Euros by 2020 - or about a third. Spain and Italy - major markets, under great macroeconomic pressure, with unusually high voice pricing - are especially in the firing line.


Forecast Mobile Telco Revenues in Euro 5 Economies


Source: Telco 2.0, European Mobile: The Future's not Bright, it's Brutal

Join us at Digital Arabia (5-7 November, Dubai) and Digital Asia (3-5 December, Singapore) to discuss this and the outlook and lessons at a global and local level.

How will the operators respond? Telefonica has been a pioneer in Telco 2.0, and this week they were pushing hard on the carrier billing front. In the UK, O2 is going to cut the share it takes of transactions processed through the PayForIt system in the hope of making them an economic solution for many more applications. At the same time, another pioneer operator, Telenor, is becoming the first carrier to be a customer of Telefonica's BlueVia developer platform. This is interesting, as Telenor's Content Provider Access was one of the very first Telco 2.0 projects way back in 2004.

There's also Telefonica Dynamic Insights, their new division which will sell subscriber data via a partnership with GfK.

O2 also had a major outage this week.

One thing that always cheers people up is a bit of merger activity, for some odd reason. Vivendi, having decided to sell Telecom Maroc last week, is now looking at cableco Numericable as a potential acquisition. SFR would no doubt be a stronger proposition with a DOCSIS network, but you do wonder about the idea of selling one telco to buy another.

Meanwhile, will Softbank acquire Clearwire? It's a challenging one, not least because Sprint can't just sell Clearwire to Softbank as it doesn't own enough shares, so Sprint might have to spend money buying out holdouts in order to sell. The deal makes a little more sense when you realise that Softbank is deploying TD-LTE, like Clearwire.

Of course, there's one way to fix the problem of Sprint not owning the whole of Clearwire. Just buy the whole of Sprint! And that turned out to be precisely what Softbank did. It's far from clear how this is going to work (and the structure is special), but Masayoshi Son has made a career of turnaround projects.

T-Mobile USA's CTO Neville Ray says that the MetroPCS VoLTE network is going to stay, although he's not sure if it's the long term solution. Etisalat says it's not selling out of its foreign investments.

On the other hand, smartphones sell and keep selling. Horace points out that the PC industry is seeing volumes shrinking, for the first time in 11 years, or in other words, since the last recession.

Canadian analyst thinks BB10 won't make Christmas, but on the other hand app submissions just opened, and he also thinks it won't matter much because the Windows phones won't do much. This hands-on review of the Nokia Lumia 810 will not help much, as it is only a form-factor dummy.

However, this Wired hands-on review of the Samsung Galaxy S III Mini is unequivocally terrible.

The new Microsoft Office is coming to iOS.

Nokia's VP of user experience design blogs at UK Wired, meanwhile, and discusses research on women and smartphones. Interestingly, camera specs sell, and a bare (51%) majority in Europe care about the colour of the case, although the number is higher elsewhere.

Britain! We have the lowest percentage of homes covered by FTTH in Europe, with a massive 0.05%. Doesn't that make you proud to be British? The good news is that Hyperoptic has decided to double its deployment in London after better-than-expected takeup.

Cisco has terminated a reseller agreement with ZTE, after they discovered that Cisco equipment was finding its way to Iran via ZTE, in violation of any number of US laws. OpenBTS's David Burgess, meanwhile, looks at the Huawei row and makes a case for open source software. While he was at it, hackers took a look at some Huawei kit and discovered that it's not the spies you should worry about, it's the default passwords.

Meanwhile, ZTE reported horrible results, with a substantial loss in the first 9 months of the year, notably because of the "Iranian market" but also due to pressure on its margins. Being the industry's low bidder, its margins are naturally slim.

(Speaking of Iran, in case you're wondering, the MTN vs Turkcell case has come up in court, and been adjourned.)

Super-WiFi vendor Ruckus Wireless is going for an IPO, and The Voice of Broadband fillets the S-1 form. It's an impressive showing, and over half the company's employees are in R&D.

And Surrey University, well-known for being the home of Surrey Satellite Tech, has snagged a major project to research 5G mobile. £11m comes from the government, and another £24m from Huawei, Fujitsu, Rohde & Schwarz, AIRCOM, and Telefonica.

Up in the cloud, a new trend - investment funds putting their money directly in data centres. Fidelity Investments is putting up $200m for a massive project in Nebraska codenamed "Photon". The customer is a secret. This isn't even the only huge secret data centre in Nebraska financed by your pension fund - there's also the even bigger Project Edge.

Here's an OpenStack modular data centre in a car park.

Amazon Web Services has pushed a lot of features from EC2 into its GovCloud, the special security-focused product they offer US government customers.

Building a gigantic DNS infrastructure at UltraDNS.

Google has walked back its use of Zagat restaurant ratings, a business Marissa Mayer decided to buy. Arik Hessendahl at AllThingsDigital suggests a solution to the Google-FTC row.

ReadWriteWeb reports on the Google Books lawsuit and its surprisingly uncontroversial end.

How to turn off ad tracking in iOS 6.

Fight! Fight! Dan York takes issue with Martin Geddes' "hypervoice" presentation. Meanwhile, Tim Panton of PhoneFromHere talks about the Burning Man OpenBTS network. A bit more here.

Fuzebox, a new unicomms solution for the iPad. Check out some interesting comments about channels to market, VARs, and enterprise voice.


telco2.net | 14-Oct-2012 20:35

European Mobile: The Future's not Bright, it's Brutal


The mobile industry's combined revenues from voice, messaging and data services in the EU5 economies (UK, France, Germany, Spain and Italy) will drop by nearly 20Bn Euros, or 4% per year, in the next five years, and by 30Bn Euros by 2020, says our new analysis here, which includes forecasts and analysis by country.

Join us at Digital Arabia (5-7 November, Dubai) and Digital Asia (3-5 December, Singapore) to discuss this and the outlook and lessons at a global and local level.


Forecast Mobile Telco Revenues in Euro 5 Economies


Source: Telco 2.0, European Mobile: The Future's not Bright, it's Brutal


telco2.net | 11-Oct-2012 11:14

Digital platform strategy: how Google, Apple and Amazon keep winning


We've just published an extract from our new strategy report 'A Practical Guide to Implementing Telco 2.0' (of which Part 1 is now available) which shows key lessons for telcos from the internet players' 'platform strategies'.

As background, we find that many telcos traditionally think of every new service as a profitable new revenue source, and create services in silos with little thought for the total customer experience and overall creation of value. In contrast, the big internet and tech players typically build their future offerings as part of an integrated strategy to raise the overall value of their platforms. For more see, please the extract here.

Generic telco strategies of cost reduction and growth will benefit from a 'platform strategy' approach

telco2.net | 27-Sep-2012 16:30

Meet the CEA's Chief Economist at Digital Asia (+ free CES passes)

We're delighted that the CEA's (Consumer Electronics Association) Chief Economist, Shawn Dubravac, will be joining us at the Digital Asia event in Singapore, 4-5 December, 2012.

Collaboration with the CEA: 2013 International CES® - The Global Stage for Innovation

We're also proud to be partnering with the CEA, which produces the seminal annual CES event, and unites companies within the consumer technology industry.

The International CES event is taking place on 8-11 January, 2013 and will welcome an expected 150,000 consumer electronics industry professionals, including 35,000 international attendees representing 150 countries to Las Vegas, Nevada U.S.

CES features 3,000 exhibitors across 1.8 million net square feet of exhibit space, 15 overarching product categories, more than 20,000 new product announcements every year and 20 TechZones. Don't miss this year's newest discoveries in automotive electronics, digital imaging/photography, entertainment/content, wireless & wireless devices and more.

Registration for international attendees is free until 30th September. Visit CESweb.org and register today.

CEA members tap into valuable and innovative resources: market research, networking opportunities with business advocates and leaders, up-to-date educational programs and technical training, exposure in extensive promotional programs, and representation from the voice of the industry.


telco2.net | 20-Sep-2012 15:38

iPhone 5 reaction (Passbook in, NFC out); UK EE LTE Go!; ISIS stasis - Telco 2.0 News Review

(Ed. Just 7 weeks to go to Digital Arabia in Dubai, 6-7 November, and 11 weeks to Digital Asia in Singapore, 3-5 December. The agendas cover the Digital Economy, Digital Commerce and Digital Entertainment in each region.)

Apple launched the iPhone 5 this week, and a new features run-down is at the link. There's nothing radically new, but a lot of incremental improvements. Wired offers a specs comparison if you want to play Top Trumps, although one of the telling details is that all the phones look much the same expect the Nokia Lumia 920. Some more reviewing is here.

One important update is Passbook, an app with a faintly creepy name which acts as a bucket for tickets, receipts, and the like. There's an API that standardises how you get secure content into and out of the bucket, and Webmonkey points us to a Rails service someone built as an example of how to integrate it with a Web site.

One important absence is NFC support, trailed as always in the run-up to an Apple product launch and still not included. Dean Bubley, in typically acerbic style, agrees with Apple VP of marketing Phil Schiller:

It's not clear that NFC is the solution to any current problem

Having turned over their entire Web site and most of the mag to all-iPhone-all-the-time, Wired tried to scramble back over into seen-it-all territory with a list of 5 Things That Would Make Us Fall in Love With the iPhone Again. It is unlikely that Apple is worried, as Horace's forecasts would suggest, especially if the trend is maintained that iDevices defy the deflationary tendencies of Moore's law.

Ars says it doesn't have USB 3.0. Apple patents Siri-on-a-Mac. The distinction between parallel and contending voice and data in the CDMA and GSM worlds survives in the iPhone 5, for now.

And Apple's social network, Ping, has been quietly taken out and shot.

Delight at EverythingEverywhere aka Torange - after all the wrangling, they are going to kick off this autumn with iPhone 5s and with at least a token LTE network for them to ride on. It actually looks like they might get some of that famous first-mover advantage, as the solution Apple picked to the global LTE spectrum mess was to include the 2.3 and 2.6GHz and 900MHz bands out, as Sam Goldwyn might have said, in order to get the 700, 850, 1800, and 2100s in. The 2.6GHz is still up in the air, and the 2100s are full of UMTS traffic, and Apple unsurprisingly picked the AT&T-specific 850s over the UK-specific 800s, so it looks like EE is going to have a clear run for quite a while, and a whole variety of European markets are going to be stuck with LTE but no iPhones on it, or iPhones and no LTE. What a mess.

In this week's Chart of the Week, the 3G and 4G Wireless Blog summarises the UK spectrum position as OFCOM sees it.

Details of the roll-out are here, and it's going to have fairly impressive consequences for T-Mobile and Orange. Although EE is still going to run the two brands on, the whole retail presence is going to be rebranded, and the LTE network will be reserved for EE subscribers only - or to put it another way, the T-Mo UK and Orange businesses are being put into run-off. What would be the point of opting for a non-EE service plan, or not moving over to EE when your Orange or T-Mo plan comes up for renewal?

EE claims that it will reach 70% population coverage by the end of next year and 98% by the end of 2014, with 16 cities (London included) being served by Christmas. It looks like the Nokia Lumia 920 will have the 1800MHz band in its LTE radio, and EE may even get an exclusive on the new gadget.

And they were even talking about fibre. As so often, it looks like the DTAG main board was just playing hard-to-get and actually, T-Mobile is going to make the investment. Like they did with the States, and then again with US 3G, and then again with US 1700MHz spectrum.

Meanwhile, SingTel has upgraded to HSPA Dual Carrier with Ericsson, and given Ericsson the contract for the follow-on deployment of LTE.

In the US, the FCC is planning to release a really substantial chunk of spectrum. But the carriers don't really want it. The idea is to permit spectrum sharing between radar and cellular networks in the 3.5GHz band, and progressively work up to releasing all the 1,000MHz between 2.7 and 3.7. This would only really work for small cells, both because the frequencies are relatively high and therefore less suited for macrocells, and also because the sharing itself implies power restrictions.

UCLA researchers demonstrated that operator billing systems are surprisingly poor, especially for users near a cell edge. Not surprisingly, the bias is in the operators' favour by about 5%.

Russian regulators asked Telenor for information about their Vimpelcom holdings this week. By sending a bailiff and 15 heavily armed police to the offices, of course.

Google has intervened against the gathering crowd of forkdroids, devices based on independent variants of Android. Acer, the Taiwanese laptop manufacturer, has postponed the launch of a smartphone based on Aliyun OS, its fork of Android, after a Google nastygram.

Google argues that Acer is contributing to the fragmentation of Android, and breaking the rules of the Open Handset Alliance, the standardisation group for Android.OHA members signed an agreement not to "fragment", although of course they can "customise" the software. Further, Google agrees that it's OK for Acer to do a Windows phone.

An official statement from Andy Rubin is on the Android blog.

Elsewhere, Google released a tool that lets you cross-compile Android code into Apple's Objective-C. You still have to re-do the user interface, but it's progress.

Microsoft, meanwhile, is keeping the details of Windows Phone 8's SDK very quiet indeed.

Meg Whitman of HP says that they will have to do a smartphone again, thus completing the U-turn over WebOS. ReadWriteWeb covers HP's latest, dreadful financials.

Seeking Alpha argues that the Kindle Fire was a turkey and the new one is an even bigger turkey, with a string of excellent charts.

Intel is showing off the first 32nm WLAN radio.

Up in the cloud, the French government is funding two national cloud projects, one with SFR and Bull, one with Orange and Thales, in order to keep the option of a local cloud open.

Here's a post on the British Government's G-Cloud blog, which gives some insight into just how painful public procurement can be and how difficult integration with a cloud computing system's administrative tools must be.

Canonical has reshaped part of its version strategy for Ubuntu Linux in order to make it match up better with the OpenStack controller, which is under very active development and subject to constant releases.

Automated admin tool Puppet now supports OpenStack.

Amazon has a start-up challenge out, plus some more VPN features.

German web hosting provider 1&1's founders are moving on to the cloud, with an offering optimised for very high performance and a visual designer tool (called Data Centre Designer).

In Telco 2.0 thematic news, here's a fascinating look at Telefonica Digital's Voice 2.0 strategy. In the future, they reckon, voice will be entirely contextual, specific to services and applications. What Telefonica bring to this is phone numbers and identity. They also expect that the handset user interface will be far more malleable, being re-rendered for each and every task, which is why they are so keen on Firefox OS.

Intel, meanwhile, demonstrated its Muse technology which tries to work out from device sensors whether you're available to take a call, and inform callers via presence and availability.

BBC Research is working on better adaptive streaming protocols for IPTV. Another social TV guide startup.

ISIS, the US operators' mobile payments play, is on hold.

Chetan Sharma reckons we're at 7 billion phones and 3 billion M2M devices. Re-arranging his sums, it looks like he's thinking of about 43 billion M2M terminals, and therefore, we're just coming up to the classic Bass diffusion take-off point around 10% of total adoption.

Why did Facebook scrap its HTML5 app and make a native Objective-C one? Testing and performance analysis.

Europe has used up its last /8 block of IPv4 addresses. Well, except for the one the British social security system has got tucked away, unused. Ed Felten leaves the FTC after a hitch as Chief Technologist, where he'll be replaced by networking guru Steven M. Bellovin. Invisible design. Intel's special no Linux ever chip.


telco2.net | 17-Sep-2012 13:03

Cloud 2.0: the fight for the next wave of customers


The fight for the Cloud Services market is about to move into new segments and territories. In the build up to the launch of our new strategy report, 'Telco strategies in the Cloud', we review perspectives on this theme, and the consequence of this change on strategy and implementation, shared at the 2012 EMEA and Silicon Valley Executive Brainstorms in our new briefing report 'Cloud 2.0: the fight for the next wave of customers'.

The briefing includes input from strategists at major telcos and tech players, including: Orange, Telefonica, Verizon, Vodafone, Amazon, Bain, Cisco, and Ericsson.
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telco2.net | 14-Sep-2012 17:49

MEF Launches Content & Commerce Survey in Middle East


MEF, the Global Community for Mobile Content and Commerce, has launched its third dedicated survey examining the mobile content and commerce market in the Middle East, inviting everyone who does business in the Middle East, no matter where they are headquartered, to share their insights into this key market.

The results will be published in November 2012 and the MEF will be joining the Digital Arabia event to present them. To find out more about the event and to apply to participate click here.

Covering a broad range of topics including new business models, NFC, mobile wallets, apps, and end user content, the unique survey, conducted in partnership with KPMG, delivers a set of industry metrics essential to understanding the changing dynamics within the burgeoning Middle East market.

As the first mobile focused trade body with a dedicated presence in the Middle East, MEF is committed to supporting growth and innovation in this strategic territory. The results of the surveys will provide a vital time series on the Middle East's mobile content & commerce landscape.

The survey contains 12 questions which should take no more than 10 minutes to complete online, and closes on Sunday 30 September 2012.

Take the survey here. Please contact middleeast@mefmobile.org for further information.


telco2.net | 12-Sep-2012 14:05

Innovation Strategies: Telefonica 2.0 Vs. Vodafone 2.0


Telefonica and Vodafone are both European-based tier 1 CSPs with substantial revenues, cash flows and subscribers. They have both expanded beyond Europe - Vodafone into Africa and Asia and Telefonica into Latin America. However, their Telco 2.0 strategies are rather different. In this extract from our forthcoming report, A Practical Guide to Implementing Telco 2.0, we outline their Telco 2.0 strategies and their benefits and risks.

We'll also be sharing some of the findings, and exploring them in the market context at Digital Arabia, the Telco 2.0 invitation only Executive Brainstorm taking place in Dubai, 6-7 November, in and Digital Asia in Singapore, 3-5 December, 2012. Email contact@telco2.net or call +44 (0) 207 247 5003 to find out more.


telco2.net | 06-Sep-2012 15:25

Wingadgets, Baidu cloud, Facebook slides, DTAG bundles Spotify: Telco 2.0 News Review

(Ed. Join us next at Digital Arabia in Dubai, 6-7 November, and Digital Asia in Singapore, 3-5 December. The agendas cover the Digital Economy, Digital Commerce and Digital Entertainment in each region.)

The first Windows 8 Phone is out and it's from Samsung. Details are at the link, with more here. You might have thought Nokia would be the first.

There is, apparently, a WP8 Nokia coming, and it's going to be optimised as a camera phone, although not quite as much as a PureView 808. The over-sampling technology demonstrated in the last of the Symbian gorillas will be ported over, though, at some point in the future.

Ars Technica rounds up the Windows hardware at IFA, making the point that between Microsoft and the manufacturers, they seem to have opted to stick with the keyboard and go for a hybrid design between the PC and the tablet. Lenovo and Asus, for example, have come up with two hybrids respectively named the Yoga and the Tai Chi - the first can fold the screen all the way round to form a tablet, while the second has two screens placed back to back.

Even the Android world is suddenly keen - Sony's Xperia Tablet S has a keyboard-cover.

Samsung, not at all daunted by the patent wars, announced the second generation of the Galaxy Notes this week. The gadget seems to be becoming their flagship product, being the most powerful in the whole line up. They've also got an Android-powered camera coming, the simply-named Galaxy Camera.

Meanwhile, Apple has asked a court to ban more Samsung phones, including the Galaxy S III this time, in a separate lawsuit. The Verge discusses the exact content of the so-called "pinch to zoom" patent and argues that it may be relatively easy to work around.

Here's an interview with the foreman of the jury in the Apple-Samsung case. The latest rumour: production of iPhone screens at Sharp is behind schedule. Anandtech has an in-depth discussion of iPad CPUs.

HP's open-source version of WebOS has released code, with two builds of the project being available. The first runs on top of an Ubuntu Linux system, and is intended for developers interested in improving WebOS itself. The second is intended for developers interested in porting the OS onto new hardware. Job listings also suggest that HP is recruiting engineers for WebOS in Sunnyvale and at their Shanghai R&D centre, after it fired them all in February. It's just another week at the industry's crisis club.

More details are here.

Amazon announced this week that the Kindle Fire was being discontinued. The question is what will come after it. Horace estimates that Amazon sold just under 5 million devices, which was probably the original production run, a disappointing performance given the marketing welly of the Amazon.com front page. He also argues from this that content sales to KF users would have to have been sensational for Amazon to earn out the loss-leader pricing and actually make money.

On the other hand, the original-and-best Kindle remains an iconic device and Ars Technica discovers that the 3G version is remarkably good as a device to take into the wilds, with huge local storage, austere design, long battery life, and good radio performance.

And finally, here is the heartwarming tale of how Samsung invited two Indian bloggers to IFA via their blogger outreach...and then wanted them to sign an NDA, act as "promoters" only, wear a uniform, and act as booth staff, or their return tickets would be cancelled. Classy!

Baidu announced this week that it's going to spend $1.6bn on a huge data centre to support its cloud activities. It's going to be interesting to see if they join the China OpenStack association we blogged a little while ago.

They've also launched a mobile Web browser. We can reason from this that a big part of the cloud will be caching/accelerator proxies and perhaps CDN nodes in support of the browser.

VMWare's outgoing and incoming CEOs agree that they don't believe in ARM chips for servers. Perhaps this isn't surprising, as the new guy spent 30 years working on x86 chips at Intel, but they did make an interesting point. A strong point of ARM designs is that they shut down to very low power levels when they are idle - but a major point of the cloud is to avoid having idle hardware.

Australian cloudsters will be the first to try Windows Server 2012, with a local provider (did you know that none of the big clouds operates in Australia?).

More AWS web serving features. Meanwhile, their Direct Connect product is expanding, through a partnership with Hibernia Atlantic's dark fibre network.

Here's an interview about upgrading old data centres. The generation built in the .com boom is now looking distinctly wasteful of energy compared to the latest ones - retrofitting could be a cheap way to catch up.

It's Skype's 9th birthday. Dan York discusses its potential futures, and points to this MSDN blog post on the Microsoft/Skype submission to the WebRTC process, which differs substantially from the proposals so far.

Jim Courtney has more - we like the point that the user experience and design issues will be hugely important. Phil Wolff, meanwhile, wonders what will happen in the next 9 years of Skype.

BT Research, for its part, has a fascinating project trying to identify why so little social interaction translates on video, while the movies succeed in projecting it. Their answer is essentially that films have a director, and they tried to write software that automates that role, guessing which speaker is interesting to the viewer and cutting to that camera. The upshot is like this:

Facebook shares reached an all-time low on Friday, having fallen 50% since the IPO. One major brokerage has now announced a target price of $10-15 (against $38 at the float), a range which starts to touch our November 2011 call of $30bn maximum. Bargain hunters (or indeed, anyone who bought at the IPO) should bear in mind that another wave of lock-ups expires on the 15th of October.

Meanwhile, they updated the Camera app with more features, even though they bought Instagram. Discussion of how their stand-alone product teams function is at the link.

Facebook's security engineering team is trying to identify the source of fake "likes" and get rid of them. This seems to be a significant problem for advertisers, going by the stories regarding whole ad budgets eaten up by single bots and by the fact Facebook has apparently built software to identify them.

Some advertisers are furious, although it's not clear whether they thought the clicks were real or whether they were secretly paying the spammers to juice their numbers and are angry that they got caught.

Deutsche Telekom is going to offer Spotify Premium subscriptions bundled with some of its tariffs. Streaming will be zero-rated for data cap purposes.

Freesat, the UK terrestrial broadcasters' joint satellite distributor, has integrated Netflix into its new set-top box. And here's a post on designing the BBC iPlayer for the Xbox.

O2 UK sues over the EverythingEverywhere 4G decision.

Zain is Vodafone's MENA partner. Users know WLAN is faster, but imagine it's more secure. Epic Java exploit - certainly update your browser plugins.


telco2.net | 03-Sep-2012 14:17

New Report - Telco 2.0: Killing Ten Misleading Myths


'Telco 2.0' has evolved considerably since we put forward the original concept for telcos' future success in 2006. We've just published a new report on our research portal dispelling ten myths and misunderstandings that have also evolved that can misdirect strategy.

We are also about to publish a new strategy report 'A Practical Guide to Implementing Telco 2.0' and will be previewing findings at the invitation only Executive Brainstorms in Dubai (November 5-7, 2012), Singapore (3-5 December, 2012), Silicon Valley (19-20 March 2013), and London (23-24 April, 2013). Email contact@stlpartners.com or call +44 (0) 207 243 5003 to find out more.

The Ten Myths

As an organisation devoted to driving innovation, Telco 2.0's thinking has continually evolved. Today, most of our work is focused on how to implement new business models, and helping industry players develop strategies and activities to address new threats and opportunities presented by adjacent players.

We have also learned that as the thinking has evolved it has spawned some myths and misconceptions. (NB. This is not an attempt to stifle insightful criticism or debate, as intelligent challenges and critiques are essential to the development of sound strategy and well informed decision making, and we welcome such challenges.)

What matters about these myths is that they can inject a misleading or distracting idea capable of derailing balanced strategic consideration. The propagandists' favourite weapons of 'fear, uncertainty and doubt' can easily and accidentally be triggered in this way. To counter this, here in summary are our 'Telco 2.0 realities' to what we've found to be the most prevalent and injurious misconceptions of Telco 2.0 (further details here).

Telco 2.0: Misleading Myths Vs. Realities
Source: STL Partners / Telco 2.0

telco2.net | 31-Aug-2012 11:06

Apple / Samsung; UK 4G; Cisco, VMWare and others in the Cloud - Telco 2.0 News Review

(Ed. Join us next at Digital Arabia in Dubai, 6-7 November, and Digital Asia in Singapore, 3-5 December. The agendas cover the Digital Economy, Digital Commerce and Digital Entertainment in each region.)

It's finally here: OFCOM has made its decision and given EverythingEverywhere the go-ahead to launch LTE in its surplus 1800MHz spectrum. Apparently, they already have test networks in place, so the first UK 4G service could be on line very soon. Until the lawsuits hit, of course, as this doesn't resolve the whole spectrum mess, and is only likely to provoke Vodafone and O2. EE's owners, of course, contend that the "original two" operators already have an unfair advantage because they might get to refarm their 900MHz GSM holdings.

Meanwhile, there was a brief suggestion that two 4G networks were coming, which then vanished. A condition imposed on their merger by the European Union requires EE's owners to dispose of a substantial chunk of the 1800s, and this week they sold 2 15MHz channels to 3UK. There's a detail, though - EE doesn't have to move out until late 2013 for the first 2x10MHz and 2015 for the rest, so 3UK won't be at the LTE start line. However, the proposed rules for the 4G auction are set up to ensure 3UK gets a serve. If they have a chunk of 1800MHz spectrum already, to go with their 2100s, they may well decide to go for the 800MHz digital dividend block, which leaves the Original 2 with the 2600s.

Huawei engineers have been out installing the LTE radios and pulling more fibre to the EE GSM1800 sites, so there's a good chance that some form of service will be available on the 11th of September when the regulatory clearance kicks in. Unless the courts intervene. For its part, 3UK has contracted Samsung for its LTE RAN, which means that it's reducing its commitment to the MBNL network share with (half of) EE.

Meanwhile, the cost of laying backhaul fibre into the countryside may come down.

Telstra gives some details of the next wave of 4G deployments in Australia. A call on the Aussie opposition not to wreck the NBN after more people than expected signed up for 100Mbps service.

At the device end of the tube, Apple won its case against Samsung, successfully defending its patent monopoly on bevelled corners...well, there is some more serious stuff in there, mostly regarding UX interactions, but still, bevelled corners. Samsung gets to pay $1.05bn in damages, and Apple is trying to get a number of phones banned (list here).

Interestingly, that doesn't include the Galaxy S III or the Galaxy Note, which has led some people to question who really won the case. For example, ZDNet argues that a ban on the GS II might lead to more GS III sales, probably nothing but good news. The Monday Note also points out that the hit list covers a small percentage of Samsung's volume and revenue, while GigaOM notes that the fine amounts to two days' revenue and suggests that being publicly outed as producing something very like an iPhone might not be such a bad thing.

In other Android litigation, Google denies it paid any bloggers to take its side, but does release a list of people who commented on the case and had been paid by Google unrelatedly. And Stanford University tries to estimate just how much IPR Intellectual Ventures has bought up.

ZTE hopes to double its sales of smartphones. Nikon launches an Android-based, hybrid smartphone/compact digital camera - it looks remarkably like a Samsung device with a huge lens sticking out of the back we saw back in 2006.

Apple names the new heads of software and hardware engineering. RIM changes personnel in Europe.

A chewy announcement from Cisco - they are making a significant move into software-defined networking and the cloud. In practice, this means that there is now a unified API for programmers working with the whole line of routers, across all three Cisco operating systems, a new virtualised switch product which implements OpenStack standards, and implementations of OpenFlow controllers and agents. The OpenFlow software is only a proof-of-concept, but it's a major milestone that the technology is being taken seriously by the company that makes 80% of the world's routers.

VMWare was having its annual shindig this week and took the opportunity to change a pricing plan which, rather perversely, charged customers more if they managed to run more virtual machines on the same hardware. So, the better use you made of the technology, the more it cost.

The reason for the change, as Ars Technica points out, is that Microsoft's Hyper-V, plus the availability of a free solution in OpenStack, is putting them under price pressure.

VMWare, as a result, is talking up its features and specifically those of its vCloud Director management solution - this High Scalability post argues that cloud deployment is all about automation, which implies they have a point. Product details are here.

In other product news, IBM has announced its new line of mainframes. As the NYT points out, it's a surprisingly big business and one that has a lot in common with the cloud.

Here's some detail about a major Facebook internal project, Prism, which provides a global job routing and balancing service for their Hadoop clusters. Like Hadoop itself (and a lot of Facebook infrastructure), it's an effort to replicate a proprietary Google system. Like Hadoop, Facebook plans to release the code as open-source software. Meanwhile, Google itself has yet another new cloud data-mining innovation, this time a distributed column store (like a key-value store, but the key matches a stream of values not a single value).

Rather than a Chart of the Week, meanwhile, here's a Talk of the Week, from Google's infrastructure king Urs Hoelzle. He says GMail costs less to run than self-hosted e-mail by a factor of 100.

Here's an Amazon Web Services blog post on their high performance computing features in EC2. The post includes a link to launch an EC2 HPC cluster instantly. There's also a HOWTO on running the ArcGIS geoserver in their cloud.

The cloud isn't magic, though: Salesforce's Q2s are pretty dreadful.

China Mobile will store 16GB of your stuff in their cloud.

Facebook's new app for iOS relies for its instant messaging and status updates on a new network protocol invented by IBM Research for M2M applications, interestingly enough. MQTT (Message Queueing Telemetry Transport) is designed to serve devices with minimal power budgets, like M2M sensors, but provide real-time push delivery - a combination which is always challenging for mobile devices.

The Facebook Engineering blog has a detailed technical discussion here.

Elsewhere, dating network Zoosk's CTO tells High Scalability about the realities of delivering instant messaging at scale using XMPP.

Skype has introduced a new photo-sharing feature.

Salesforce's developer blog has an interesting post about using the Tropo API to take calls and transcribe voicemail, then push their content into the Salesforce task queue.

Forcing customers to the Web site doesn't necessarily save on call centre costs, Telstra may have found out.

Virgin Media updates its CPE firmware and breaks the SIP application-layer gateway. Businessweek interviews Viber about their Belarussian developer farm.

Dan Rayburn reports that Akamai has guaranteed AT&T at least $100 million in revenues from their CDN reseller deal.

Juniper Networks, meanwhile, has opted not to build a full CDN solution.

What exactly are value-added services in a CDN?

The BBC pushes a new version of iPlayer, optimises its websites, and does fundamental research on TV user behaviour.

Is TV ripe for disruption?

Mobile infrastructure as catalyst for community solar power. Syria relies on PCCW for transit. When fancy pricing attacks. And Internet advertising's uncanny valley.


telco2.net | 28-Aug-2012 13:59

Gold in the 100Mbps Streaming: Telco 2.0 News Review

Telco 2.0 Top Stories

(Ed. Join us next at Digital Arabia in Dubai, 6-7 November, and Digital Asia in Singapore, 3-5 December. The agendas cover the Digital Economy, Digital Commerce and Digital Entertainment in each region.)

The BBC Internet Blog has a superb series of posts on the challenge of building their Olympic Games web site and delivering the vast volumes of HD streaming video involved to the public. This covers the video-pushing element of the problem - interestingly, the BBC engineers chose to deliver the live feeds exclusively using HTTP streaming with adaptive bitrates, in order to make use of the corporation's whole web serving and caching capacity, while their Flash streaming infrastructure was used for the on-demand catchup service. The system was first used for last year's Wimbledon and progressively rolled out to bigger events (such as the football European championships) in order to load-test it. Some more detail is here.

Beyond the video (and of course audio), there was also a massive challenge designing, building, and serving up the Web application, documented here with this week's undisputed Chart of the Week:

There's much more here, including the detail that the Beeb's coders built an application to simulate the entire Olympic Games, just as a test-harness for the web site.

In other TV news, Netflix started its expansion around Europe, turning up service in Norway, Denmark, Sweden, and Finland. Streaming is unlikely to be a problem, but you can expect that the studios will insist on another round of heavy upfront payments.

Meanwhile, AT&T may have decided to give up trying to build its own CDN, and concentrate on reselling either Akamai or Limelight Networks. As part of the deal, AT&T's digital media group would move to the new partner, but Dan Rayburn thinks the licensed CDN deal with EdgeCast will continue. He also reviews four new smart-TV devices.

Apple may be going to make the new Apple TV, when it lands, more like "the YouView model". Does that mean late, expensive, and crippled by endless content-provider arguing?

Jason Kilar is leaving Hulu, and the owners are looking at a major strategy change, with the site no longer being the first point of contact for their content. Which does make you wonder what the point of it is...

Finally, the 3G & 4G Wireless Blog reports that Samsung has demonstrated enhanced MBMS (Mobile Broadcast-Multicast Subsystem), but between Zahid, Kym Larsen, and Qualcomm they can't work out why!

NTT DoCoMo announced this week that it's reached the mark of 5 million LTE subscribers. Axtel in Mexico upped its FTTH speeds to 150Mbps. Meanwhile, the UK still has neither LTE nor FTTH. Should we start counting the weeks until the LTE mess is sorted out?

Anyway, TalkTalk is an MVNO now.

Australian analysts, who must be truly dedicated, have attempted to estimate how much it costs to maintain the copper infrastructure, and they reckon that the deployment of the NBN's fibre will save about A$600 million a year.

T-Mobile has a think about LTE quality of service and goes with Diffserv.

The smart meters that ate Philadelphia - or rather, they set it on fire.

Ubiquisys closes another $19m of venture capital.

HP has spun-off the WebOS team into a quasi-startup, Gram...and then they created a new Mobility unit, led by the former head of MeeGo at Nokia, to have another crack at tablets and possibly phones! On the other hand, another tablet project is staying in the PC group. Those wild and crazy guys!

Elsewhere, another of those web-serving to market share exercises reckons things are dire at RIM. However, here comes the shiny: CEO Thorsten Heins is doing a roadshow of major carriers, demonstrating two new phones with the beta of BlackBerry OS 10.

Should they license the OS?

A Finn succeeded in throwing an Olympic javelin distance with an old Nokia phone this week. Ere Karjalainen said he prepared "mostly by drinking". Well, perhaps he should have waited for the 5th of September, when some sort of joint Nokia/Microsoft announcement is planned, probably the new line of Windows Phones.

Has Microsoft discovered the joys of the subsidised hardware plus bundled services business model? Surface tablets might be surprisingly cheap because MS makes its money on an Office 365 subscription.

iOS hacker demonstrates a massive SMS security hole. The latest Apple vs Samsung action. And HTC Q2 sales are down 24%.

In the cloud this week, we now know what's up with the new Facebook data centre. Project Sub-Zero, which is rising next to the main data centre, seems to be a massive backup farm. The aim is to radically reduce power consumption without needing to store data on tape.

Just down the road in Prineville, Oregon, Apple is building yet another monster DC, which will take the town over 1 million square feet of datacentre space.

Meanwhile, James Hamilton has a must-read post on Facebook and energy efficiency. Interestingly, Google's implied server count has stopped growing, implying that their virtualisation, load balancing, and job routing technology - the heart of the cloud - has progressed fast.

After all, they're the only company that buys its parts direct from Intel's cloud division. Although the fact that Google builds all its own servers was fairly well known, this is actually the first time either party has put it on record.

And this is interesting. "Dremel" is an internal cloud service at Google that lets you do SQL queries over huge data sets, instantly. While everyone else was still ooh-ing over NoSQL, it's interesting that both Google and Akamai found it necessary to re-implement the relational query language over their NoSQL data stores.

We blogged about AOL's micro-data centre, a sealed, lights-out pod designed to be distributed closer to users, a while ago. Now there's an indoor version with wheels.

Amazon Web Services is working on its channels and customer support. Specifically, having just launched their Amazon Partner Network, they're starting a "Premier Consulting" tier to reward the most successful partners.

They've also added support for Python applications in Elastic Beanstalk and integrated it with their Relational Database Service. This basically makes the EC2 cloud into a giant factory for websites using the popular Django web framework. A detailed how-to is here.

Somebody asked High Scalability for advice, and the comments thread gave it.

And the OpenStack community has named the new members of the board. Note the lack of anyone from the telecoms industry.

China Mobile announced its numbers for H1, with $9.7bn profits on $41bn in revenues. The big news, though, is that even they are feeling the pinch from price wars and OTT competitors in particular.

Just who are those competitors? Essentially, a world of Android apps. This post on the Guardian Apps Blog is focused on fighting the Apple vs Google share wars, but it does make clear that Android is exploding in China.

China Mobile, for its part, is buying into a local startup that's developing a Siri-like voice assistant. That must be quite a challenge in a language with syntactically-different tones. This comes after Apple fell out with the carrier over licensing Siri.

On the other hand, a wave of bankruptcies has torn through part of the Chinese Web - more than 3,000 Groupon clones have failed this year.

Elsewhere, the judge in Oracle vs. Google's demand that both parties name the bloggers, journalists, and other opinionators they're paying has caused a huffy. Both parties deny doing so and accuse the other. Bang their silly heads together, Your Honour.

Facebook, Groupon, and Zynga shares tank as the lockups begin to expire. OnLive is on the edge. Cloudsters Joyent try to back out of their "Lifetime" hosting product.

A crack at estimating OTT revenues. Pirates attempt to stop compulsory phone registration. Orange Jordan down. Adventures with BT support.

20 years of ThinkPads.


telco2.net | 20-Aug-2012 14:17

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