It’s the end of an era. The torch is being passed on. Let the trumpets sound out: The Emperor has abdicated. A great leader knows when his work is done; he understands that there comes a time when fresh hands must steer the course of his mighty ship. And so it was this week, that Lars-Johan Jarnheimer stepped down as president and CEO of Swedish carrier Tele2, to be replaced by Harri Koponen.

You’ve got to feel for Koponen. Becoming CEO of a cellular carrier is a massive achievement. But to have your moment of glory eclipsed by the news that the CEO of the world’s largest and most famous operator (by international footprint and revenue) is moving on is rotten luck. Which is why the Informer has given Koponen top billing this week, awarding second place to the news that Arun Sarin’s doing the off at Vodafone.

Sarin’s been in the chair at Vodafone for five years, having taken over from Chris Gent - the man who built the empire. A pin-striped British businessman of the old school, Gent bowed out with a string of impressive acquisitions to his name, leaving Sarin to make them all work nicely together.

He didn’t always have the easiest time of it. Two low points stand out: the first, in 2004 shortly after his tenure began, saw his first big acquisitive manoeuvre fall flat as he failed to gain control of US carrier AT&T. The second was in 2006 when, after recording the largest loss in British corporate history - £14.85bn - there was a shareholder revolt with 14 per cent of investors withholding their vote of confidence at the AGM. This was a bit harsh, as IDC analyst John Delaney pointed out this week, given that the loss was in part an after-affect of the Mannesmann takeover that many consider Chris Gent’s greatest individual accomplishment.

You could easily argue, though, that Sarin’s acquisition of Indian carrier Hutchison Essar was a bigger victory - India’s only the world’s fastest growing mobile market after all. Certainly it won Sarin an awful lot of admiration and - with Vodafone this week reporting a profit of £6.7bn for the year to March 31st (up from a loss of £4.8bn the previous year) - it probably makes sense for him to head for the door.

He must be a bit tired. A weary-looking investor relations chap at Vodafone HQ once told the Informer that Sarin liked his daily news briefing - face to face - at 7.30am. Whether his replacement, deputy CEO Vittorio Colao, will want the same service remains to be seen, although the early signs are that continuity will be the key theme of Colao’s premiership.

Sarin’s last day is July 29th, and the Informer imagines that an envelope containing a big “Sorry you’re leaving!” card and several kilos of jangling coins is making its way from desk to desk at Newbury as you read these words. In the card, no doubt, the standard messages will appear: “You lucky b£$%*!d. Another one escapes! Good luck on the outside! Viv x” and “Don’t forget about us! Stay in touch!!! Jon B.” He won’t stay in touch, Jon B. They never do.

One of Sarin’s most sensible decisions was to get the hell out of Japan where, this week, an initiative has been launched to limit mobile phone usage by children. The Japanese government has given its approval to the plan, which was drawn up by an education reform panel. The kids are mad for mobiles in Japan and there are concerns that it’s becoming worryingly close to an addiction, with added fears about cyber crime and bullying thrown into the mix. The nation’s cellcos will presumably have to bow and smile and agree with the whole thing in public, while cursing the meddling bureaucrats behind closed doors. In other news from Japan this week, a cat has been appointed to the role of station master in one town and a woman has been found living in a man’s cupboard without him knowing about it in another. And they think kids on phones is a problem…

Across the water in China, where commando-going actress Sharon Stone offended over a billion people with some mind numbing comments about karma this week, there are changes afoot in the telecoms market. The government has revealed plans to reduce the number of state-owned carriers to three with some nifty consolidation. China Mobile will merge with fixed carrier China Tietong Telecommunications, China Telecom will take over the CDMA network of China Unicom, while Unicom’s GSM network will be merged with China Netcom. Phew!

This fuelled more speculation this week about just what’s going on with 3G licensing in China, which some people still expect to happen before the Olympics in Beijing this summer.

Netcom holds a 20 per cent stake in Hong Kong quad-play outfit PCCW, which announced this week that it wants to consolidate its offerings into a new company called HKT Group and flog off a 45 per cent stake. Richard Li, the firm’s majority owner, has tried to sell the firm before - in 2006 - but was blocked by other shareholders. During the proposed sale two years ago, it emerged that Li’s father and Asia’s richest man, Li Ka-Shing, was involved in the consortium proposing to buy the carrier, exposing a family rift and preventing Li from voting on the sale.

Meanwhile, PCCW competitor 3 Hong Kong said this week that it will be launching the iPhone in Hong Kong and Macau later this year. 3 is a 3G only operation, right? So you know what that means.

The firm’s Irish arm struck a deal with BT this week that will see the fixed player build out an expansion of 3 Ireland’s backhaul network, supporting speeds up to 14.4Mbps by next year. It’s worth EUR44m to BT.

In other 3G news, Russian carrier MTS lit its WCDMA network in St Petersburg this week, joining MegaFon in the Russian 3G stakes. The firm has plans for ten more city networks during the course of this year and up to 40 further cities will be covered in 2009. MTS also holds 3G licences in Uzbekistan and Armenia, where it reckons launches will happen in 2009 too. All in all the firm’s earmarked $1.6bn for 3G development in Russia and the CIS over the next three years.

Russia’s no stranger to spy stories but it was in Germany this week that dodgy covert surveillance reared its ugly head. Well, it didn’t rear its ugly head, that wouldn’t be very covert would it? It sat in a van with a telephoto lens, shall we say?

Over last weekend, Deutsche Telekom said it was launching a full investigation in to allegations of “misuse of call records”. Chief executive Rene Obermann said that recent findings suggest call record data was abused between 2005 and 2006. It is understood that people within the company had hired an external firm to analyse call records of conversations between board members and the press in a bid to identify the source of numerous leaks.

Obermann said the company had already investigated an individual case in the summer of 2007, following a tip-off from within the company and was able to resolve the incident. As a result, Deutsche Telekom reorganised its security department and implemented new control mechanisms. Not very good ones, it turns out.

He revealed that last month the management board had received information concerning broader and even more serious allegations from a third party commissioned by Deutsche Telekom’s security unit.

“I I I am m m sh sh shaken to the the core by these allega a a tions,” said Obermann, shaking to his core. “We take the situation most seriously. We have called in the public prosecutor’s office and will support them in their full investigation of these allegations,” said a much steadier Obermann. “By taking this approach we want to ensure the greatest possible level of transparency and allow criminal prosecutors to bring those responsible to justice.”

As everyone knows, however, there’s no justice in the world. If there were, brattish Chelsea footballer Ashley Cole wouldn’t be a millionaire. You can bet he’d be the type to go for one of the phones that a firm called Gresso has launched. You’d have to be stupid to drop $52,000 on a handset, even if it is covered in diamonds and built from ancient African Blackwood and 18 carat gold. After all, in 12 months it would be out of date and you’d be left with the ugliest brooch in the world.

In less frivolous handset news, Gartner revealed this week that, for the first time since it began tracking the handset market in 2001, sales for the first quarter of this year actually fell in Europe - by 16.4 per cent. That’s the cost of pushing contracts up to 18 months, which the vendors probably don’t like much. There was more bad news as Gartner suggested that sales in high-end handsets in particular were affected. As we get progressively more skint, it seems we are shying away from the top-notch phones. So up yours, Gresso. Gartner warned vendors to strengthen their mid-range workhorse portfolios in response to these straitened times.

Presumably we’ll all be cutting back on far-flung holidays as well. Especially now that European operators have reacted to the EU roaming cap by hiking prices for calls made from further afield. By as much as 163 per cent, according to Informa Telecoms & Media.

Informa said its analysis was based on the percentage change in aggregated roaming prices on a country by country basis between 2006 and 2008.

For example, the average price of a call home to Italy made by a subscriber roaming in Russia was Eur3.67 (excluding VAT) per minute in 2006 but had risen 25 per cent to Eur4.58 since the Eurotariff came into play.

A German mobile user outside the EU has seen a massive 163.7 per cent price increase since 2006 for a call home from Africa.

Informa analyst Angela Stainthorpe said that since the EU roaming regulation came into force, operators have reported roaming revenue declines into the hundreds of millions of Euros. “As roaming traffic growth hasn’t kept up with falling tariffs, operators are looking elsewhere to recoup their losses.

“Although only 15 per cent of EU roamers are travelling outside the EU, the high per minute rates they pay for the privilege have had a significant impact on roaming strategy. In some cases, countries that were once relatively unimportant to EU operators have now been elevated to prime position purely as a result of their contribution to roaming revenues.”

And that’s about it this week, although during one of the five ‘leisure minutes’ that the Informer is permitted each day, he found his way onto the website of comedian Emo Philips. There on the homepage was the following snippet of Emo wisdom:

“Cellphones are like dogs’ nipples. You don’t have to SHOUT INTO THEM!”

Take care

The Informer

 
 
 
 
Mobile operators are starting to uncover new business models that help to address the problems posed by saturated mobile markets and high handset subsidies.

European operator Telefonica O2 announced last week that its SIM-only service, Simplicity, has almost half a million customers and accounts for one-third of its online sales. The SIM-only concept was pioneered by discount MVNOs in northern Europe and is now being embraced enthusiastically by mobile operators.

It holds two key attractions for operators, according to research from Informa Telecoms & Media. First, it enables them to accelerate the migration from prepaid to postpaid price plans. And second, it significantly reduces subscriber-acquisition and -retention costs. SIM-only customers keep their existing phones, so operators do not need to resort to costly device subsidies.

With the impending credit crunch in many developed markets, SIM-only services are extremely attractive to users who are prepared to keep their old phone in return for lower subscription and usage fees.

Some operators have started handing out “free” SIM cards as part of a special promotion. Even though the vast majority of these cards remain unused, it is a relatively low-cost and effective way for an operator to market its service and can generate a good return on investment with even an extremely modest take-up.

The UK’s O2 is an example of an operator that has successfully used this approach. In countries where there is a strong incumbent, a “challenger” might believe that it has a better chance, in the short term, of persuading target customers to take out an additional subscription to use for specific services rather than attempting to make them completely drop their existing subscription.

For example, in Italy, Wind’s Noi family tariff is particularly convenient for on-net calling, and the operator has become the secondary supplier for millions of Italian mobile users. Typically, the operator offers a package of two to four SIM cards, and calls between the cards are virtually free. The latest examples of such promotions are the Noi Wind Pack and Noi Wind Pack SMS, both launched in 2Q07: The Noi Wind Pack SMS offers 4,000 text messages to Wind numbers for a monthly fee of Eur2 (US$2.70), and the Noi Wind Pack offers 200 on-net voice minutes for up to three SIM cards for a monthly fee of Eur6.

The SIM-only business model highlights how operators in developed markets are undertaking a thorough review of their businesses and strategies in a bid to retain their levels of profitability amid the onslaught from lean, fast-moving Internet companies and business cultures.

While SIM-only services are an effective tool to win market share, reduce subscriber-acquisition costs and spend on customer retention, mobile broadband is a brand new revenue stream for mobile operators.

Measuring the sales of HSDPA modems and data cards is difficult, because most operators report only a total subscription number that also includes HSDPA-enabled phones. However, Informa data and other financial reports - for example, sales data produced by European retailer the Carphone Warehouse - indicate that in many markets, sales of dongles in 2H07 compared favorably with those of new mobile phones.

HSDPA dongles are now among the top-selling devices for mobile operators in a number of European countries and made up more than half of the global total of 30 million HSDPA subscriptions at end-2007, according to Informa research. The number of 3.5G-connected laptops will rise to 184 million by 2012, Informa says.

In some countries, operators, retailers and service providers are experimenting with the bundling of laptop computers with mobile broadband subscriptions and dongles. In Sweden, Tele2 is partnering with mobile retailer Carphone Warehouse to offer a ?10-a-month mobile broadband subscription and a ?30-a-month subscription that includes a free laptop.

Carphone Warehouse says it can significantly expand the market for laptop PCs by subsidizing devices in this way. Its own research has indicated that children age 15 and under would rather have their own laptop than a mobile phone.

Mobile operators have the opportunity to play an even more active role in the computing market as manufacturers start to embed SIM cards in their laptops.

In August, TeliaSonera partnered with Dell to provide mobile broadband using SIM cards, using the Telia Connect Card in Sweden, Denmark, Norway and Finland. In October, T-Mobile and Sony Vaio expanded their partnership, offering four new Vaio notebook models featuring Web’n'Walk HSDPA/HSUPA data modules.

Given the importance of the SIM card in the relationship between the operator and the handset, and in the delivery of new services, the embedding of SIM cards in laptops gives mobile operators huge potential for rolling out new functionality and applications across multiple platforms and applications.

 
 
 
 
For the past few years, telecoms.com’s sister publication MCI has run an annual feature on mobile navigation and Location Based Services (LBS). And despite all the hype, in 2008 we’re still waiting for them to find their way to market.

Developments in navigation services have failed to produce any more meaningful application beyond the obvious; getting from A to B. And the operators still haven’t found a way to monetise the service.

This week, I attended a roundtable on the ‘Future of Mobile Navigation’. But the talk wasn’t so much about the future as it was about what had happened to navigation on the way to the party and when, indeed, would it actually be arriving?

Among those present: Peter Heath, director of alliances, EMEA, at BlackBerry maker Research In Motion (RIM), Oren Nissim, chief executive officer of mapping and navigation firm Telmap, Nick Langton, product manager for the Enterprise Application Partner Programme at Vodafone UK, and a handful of analysts from Yankee, IDC and Ovum, the general consensus was that to date, navigation and LBS has been an enterprise endeavour, but in order to turn it into a money maker for everyone, it needs to tap into the mass market.

There are only so many ways this can happen. One of them, the most obvious, is by making GPS available in more handsets. Heath said that RIM is actively pushing GPS into more of its BlackBerries, but the fact remains that the BlackBerry is still largely an enterprise device. To be fair, the last few BlackBerries have been curvier and more consumer targeted, but with the vast majority of mobile users on prepay tariffs, such a high end device isn’t going to break the mass market.

Vodafone’s Langton admits that LBS “are very much postpay services at present and we need a new, keenly priced model to target the prepay segment. Obviously the device will be key,” he says.

With their ever increasing screen size and the ‘always with you’ relationship we have with mobile phones, GPS-enabled devices have managed to kick the stuffing out of the PND (Portable Navigation Device) unit, fast replacing units like the TomTom. In this case the fact that phones cater better to pedestrians and offer more availability of real time info than a PND, are the winning features.

Yet translating that success to myriad other applications could prove tricky. Telmap’s Nissim said that the next generation of LBS would be context aware, such as finding your nearest cash machine. But he admitted that such services face stiff competition from the old fashioned - and far cheaper - ask-someone-in-the-street tactic. In fact, the only time I could see such a service being useful is when abroad in a foreign speaking country, but in that situation the roaming data charges would make the application prohibitively expensive.

When talking about monetisation, Vodafone’s Langton insisted that the company is generating revenue from navigation services, although I can’t imagine how, unless it’s from a cut of the subscription service to Telmap or similar. Telmap’s mapping application is sold as a white label product, and although it can be bought separately after market and installed, Nissim confirmed that the cast majority of activations are from preinstalled installations of the software. It’s well known that consumers don’t install applications on their phones, so again, the only revenues in this space come from preinstallations on a small number if higher end handsets.

Going forward Langton admitted that Vodafone didn’t really know what type of LBS content would be a revenue generator, although he said “m-commerce and advertising are elements we need to take a look at.” At this point the hackneyed example of a coupon that gets sent to your phone as you walk past a shop was wheeled out. A word of advice: just stick a sign in the window if you’ve got a special offer - it’s more effective and less annoying.

Langton drove the point home: “We see a high activation rate of GPS applications in the handsets we sell, people see it as a good value add.” And that’s it exactly - it’s a good value add. In terms of premium services, Telmap’s Nissim reckons a consumer would be prepared to spend £60 per year on an application that warns them of upcoming speed cameras, but this is hardly a killer app. It’s more of an extension to the existing killer app for GPS - finding your way from A to B.

By this same logic Nissim also believes that consumers would be willing to pay for services such as local restaurant reviews. Again, this seems to be a non starter. If I’m going to a restaurant and I’m going to care that much about the experience, then it probably won’t be a spur of the minute decision. I’ll have booked ahead and got the recommendation for free off the real internet, or even more shockingly, by word of mouth.

It’s almost time again for that annual LBS feature, and I’d wager that not much has changed in this space since last year. Except maybe that Nokia too has realised that navigation is a good value add. It’s acquisition of Navteq and the roll out of Ovi puts it in a perfect position to stomp all over the operators and the mapping firms by getting Nokia Maps on as many of its devices as it can as a basic feature.

It’s not that navigation has lost its way, as a service it knows exactly where it’s going. It’s just that rest of the industry has been wondering around in circles looking for killer services and applications that might not exist. As the joke goes, a really useful LBS application would be one that could point you to a really useful LBS application.

 
 
 
 
This week, the Informer received a missive from his Big Boss reminding him that inappropriate use of the company’s IT infrastructure was a sack-worthy offence. With this in mind he begrudgingly removed his teacup from the aging G4’s CD tray and took down his Ethernet cable washing line, placing his damp socks on the radiator instead. Then he took out his Big Book of Jokes and put a thick red tick next to the chapter regarding inappropriate use gags.

His Big Boss wasn’t talking about that sort of inappropriate use, silly. He was talking, primarily, about the downloading of $mut. It’s not a laughing matter, so you can take that grin off your face right now. The Informer will have to be careful with his phraseology here, for up and down the land and all around the world spam filters will happily block emails with words like f1lthy’and ‘p0rn’ - and it’s a good thing too.

The Informer’s IT department has put in place just such a spam filter, which raises the following question: Who at Informa Towers can circumvent things like spam filters? Who is not surrounded at all times by colleagues in a large open plan office, but sits alone in the gloomy basement of the building? Whose first (and sometimes only) suggestion when faced with a problem is to “turn it off, and turn it on again?” The Informer thinks he knows, but firewalls have ears, so he’d best not name names.

The corporates’ primary concern here is not protecting their employees’ innocence. For innocence - as everyone knows - is the first casualty of work. No, the corporates are simply trying to avoid any potential bad PR and, more importantly, they’re trying to avoid being sued by litigious rivals or business partners who might - mistakenly or not - receive material that they deem inappropriate.

But corporations aren’t the only organisations keen to keep a watchful eye on their flock. It has emerged this week that the UK government is mulling plans to build a monster database capable of holding the details of all mobile and landline phone calls, emails and internet sessions initiated by UK citizens. This isn’t Big Boss, it’s Big Brother.

The proposals appear to be an extension of 2006’s EU Data Retention Directive (DRD), which requires all ‘access providers’ to store call records and ‘event logs’ for a period of not less than six months and not longer than two years.

The original implementation of the DRD suffered from a number of problems - not just the massive financial burden placed upon companies required to comply with the storing of, and access to, the data in question, but also with the definition of those companies. MNVOs ran into trouble, because they are required to produce comparable data records to traditional MNOs, but do not have the same access to the complete network and IT systems that are required.

Maybe the Informer is overreacting here; he has nothing to hide, so why should he care? Well, it would be a different case if this sort of thing were to happen in a country currently being led by a wildly unpopular premier who is failing to step down in the face of overwhelming evidence that he should. Somewhere like, say, Zimbabwe where - quite coincidentally - the local regulator has just announced that it’s going to scan all text messages to make sure subscribers are not “abusing the service”. By abusing the service, we can read sharing political thoughts and ideas that run contrary to those of one Robert Mugabe.

But since the Informer lives in a nice place where all the people at the top are looking out for his best interests, he has nothing to worry about, right? Mind, if you are a fan of totalitarian police states, you’ll be glad to hear that Orascom Telecom has revealed that it has successfully trialled WCMDA 3G services inside the Democratic [sic] People’s Republic of Korea.

The Informer is pretty sure that those lucky enough to get hold a 3G phone in North Korea will be free to talk to anyone they like, about whatever they like, without fear. Because the government will be poring over every single bit of data to make sure that they’re safe. Because that’s what governments do, right?

The Informer realises that comparing Gordon Brown with Mugabe and Kim il-Sung (yes, he’s still the president, despite dying in 1994) would be unfair. The latter two were actually fairly popular in their homeland when they came to power. BOOM, BOOM.

Brown, of course, would argue that his cyber-snooping is being put in place to crack down on serious crime. Maybe he needs to have a word with the guys and gals over at the Open Mobile Terminal Platform (OMTP). They’ve written a 200 page recommendation that looks at the best ways to protect mobile devices as they begin to support more advanced features.

Back in February (remember February? It’s that short month with the really loooooong week in the middle) McAfee Mobile Security presented the results of its annual Mobile Security Report. The report, carried out in conjunction with analyst house Datamonitor, stated that 86 per cent of the 2,000 mobile consumers it surveyed across the UK, US and Japan are worried about security risks posed to their mobile handset, with 79 per cent knowingly using unprotected devices. Consumers feel threatened, it seems, but not enough to do anything about it.

Fortunately, for the carriers and subscribers alike, problems with handset security are rarely encountered. “We first saw malware for mobile phones appear at the beginning of this century,” Graham Cluley, senior technology consultant, Sophos told the Informer. “But they have always been largely proof of concept. So written by kids mostly to show off.”

Cluley estimates that there are about 200 known mobile phone viruses currently running ‘wild’. This compares to over 300,000 for Windows. “I think the criminals simply thought ‘well yes we could write viruses for mobile phones, but they’re unlikely to give us as good a return as the viruses for Windows at the moment’. Because with mobile phones you have to think about the different operating systems and the different devices. Many of the phones out there simply aren’t compatible with each other, so you are instantly narrowing your market of how many people you can infect.”

Still, just because something’s alright now doesn’t mean it won’t run into trouble down the line, which could quite easily have been what the 17th century sailors landing on Mauritius said when they first clapped eyes on the dodo. In all honesty, the Informer will probably give the OMTP’s 200 pages of wisdom a miss for now.

We’ve had the crime, now let’s have the punishment. Motorola has just been slapped with a …oh hang on, the Informer is so used to writing about bad things happening to the embattled kit maker he’s forgotten that sometimes good things can happen too. A judge in the US has ruled that the outcome of the nine year old Iridium bankruptcy fight will not cost the company a penny. Moto was looking down the barrels of a possible $4bn payout, which given the current situation would probably have just about finished it off.

Poor old 3UK wasn’t so lucky; it’s just been clobbered with a court order to cut its call termination rates by 45 per cent. Ouch. Termination rates are 3 CEO Kevin Russell’s worst nightmare (apart from the one where he’s being chased round his desk by a man with the head of a cockerel). When the Informer spoke with Russell late last year he explained: “There is a fundamental problem in the UK market on mobile to mobile termination rates. You cannot have a new entrant subsidising profitable incumbents. It has no place in a level playing field.” Seems Ofcom disagrees, and credits 3 with “significant market power”. Which, under any other circumstances, would be music to Russell’s ears.

Speaking of music, France Telecom-owned UK mobile operator Orange lifted the curtain on a wireless internet radio device this week. The Liveradio is a wifi radio device which gives broadband customers access to over 4,000 local, national and international internet radio stations. It costs £99.99 and sounds about as unexciting as the iPhone sounds exciting.

Thankfully, for Orange, it also had some iPhone-related news to trumpet this week. Quite possibly dancing round HQ to Daft Punk’s Around The World, executives at the French carrier have agreed a deal with Apple to sell the ‘must have’ gadget in Austria, Belgium, the Dominican Republic, Egypt, Jordan, Poland, Portugal, Romania, Slovakia, Switzerland and Orange’s African markets - so Guinea Konakri, Guinea Bissau, Equatorial Guinea, Senegal, Ivory Coast, Niger, Mali, Kenya, Cameroon, Madagascar, Botswana and the Central African Republic. Phew.

Sales may have slowed in the iPhone’s existing markets, as punters await the arrival of the 3G version, but the new territories will help Steve Jobs to his stated aim of flogging ten million units before the end of this year. Global handset sales did their traditional post Christmas dip in the first quarter of this year according to analysts down at IDC. A total of 291.6 million units were shipped during the Q108, down 11.6 per cent from the previous quarter. The good news is sales were up 14.3 per cent on Q107.

And there was some even better news for smartphone mobile operating system developer Symbian this week. It said 18.5 million devices using the OS were sold in the first quarter, that’s a 16.5 per cent year on year increase in unit shipments. As one would expect revenues were up too, from $41.3m in the first quarter to 2007 to $43.5m in 2008. That’s a little over five per cent.

Dean Bubley of Disruptive Analysis is unimpressed and reckons that sales are down not just seasonally since Christmas, but are even below the level of mid-2007. “Against continued shipment growth of the overall market to above 1.1 billion phones a year, that’s not looking too promising for some observers’ expectations of 30 per cent penetration of smartphones in a few years’ time,” he said.

The handset market can be a dangerous place for the uninitiated. While the balance of power that exists between operators and OEMs generally swings towards the former, one carrier rumoured to be looking at making things even more one-sided is Newbury’s finest, Vodafone.

Word has it that Huawei has decided to put up to 50 per cent of its handset business on the market, in a bid to raise around $2bn and overcome US concerns about security issues related to Chinese companies. And there has been speculation that the big V might be up for a slice.

Vodafone, of course, built its position as a telecoms super power by snapping up operators. And that’s not a strategy it looks like ditching. This week it agreed to acquire the remaining 26.4 per cent stake that it didn’t own in German fixed line operator Arcor for Eur474m in cash.

Vodafone bought the remaining shares from Deutsche Bahn and Deutsche Bank and, with full ownership of Arcor, can lay claim to some 2.6 million DSL lines, representing 14 per cent of the German market.

Staying with acquisitions, giant US chip shop Qualcomm as made a strategic investment in femto and picocell manufacturer, ip.access. The Big Q joins existing investors Cisco, Intel Capital, ADC, Motorola Ventures, Scottish Equity Partners, Rothschild Gestion and Amadeus Capital Partners, with funding for ip.access’ latest bit of kit, the Oyster 3G femtocell.

In more news from Femto Corner, industry association the Femto Forum has made some headway towards harmonising the integration of femtocells into mobile networks. Speaking with the Informer’s colleagues at telecoms.com, Forum chairman, Simon Saunders, said the operator community had agreed on a single definition for the so-called Fa interface, allowing a multi-vendor approach to femtocell infrastructure deployments.

The Informer is still not entirely convinced of the need for home-installed 3G base stations, but then his granddad said The Beatles would be a flash in the pan when he first heard Love Me Do, so writing things off early is in his genes.

Besides, with all that money and all those high-flying ‘Plugged In’ firms backing a technology it’s bound to succeed, right? Just look at Twitter bagging $15m in a second round of funding (that’s $20m so far!). The firm is currently valued at $80m. We’re not quite sure what it’s turning over at the moment, but it’s got “bags of potential”. The mind boggles. Then, of course, there’s Location Based Services.

If ever there were a case for the expression, the perennial underachiever, LBS would win hands down. This week, one the Informer’s telecoms.com colleagues attended an LBS roundtable. “We all know what the BS in LBS stands for,” he quipped upon his return. You can read more of his comments here. In case you’re rushed for time, the take-home message is that the industry has yet to locate a workable business model.

Cell-ID is not accurate enough, GPS avoids cellular networks. So how can the mobile operators make money? Well, like all good VAS the value added for the operators could come from advertising. Analyst Arthur D. Little predicts about 60 per cent annual growth in mobile advertising spend over the next four years.

Ah, advertising that never-ending pot of money that will pay for everything. It’s like having a wealthy uncle who you know will one day kick the bucket and bequeath you a fortune. Except it turns out that he’s been telling all his other relatives the same thing, and that fortune will need to be spread out very thinly.

Surely it would be smarter to find something for which punters are willing to part with cash before developing that something, rather than the other way around. Still, taking risks is what it’s all about. And with that the Informer would like to bid you all a fond farewell.

Although, as Lieutenant Columbo used to say, there is just one last thing. Last week he (the Informer, not Columbo) asked what was so special about Entel PCS, promising an answer at the bottom of the page. Trouble is, the IT crowd that sends out the email managed to delete the p.s. Maybe they were too busy monitoring inappropriate material. Here’s the answer: Ay Carumba! You guessed it! Entel PCS was the first GSM carrier to launch on South American soil, earning it a GSMA Gratitude Award in 1998.

Hasta la vista, baby

(I’ll be back)

The Informer

 
 
 
 
A large ecosystem and economies of scale alone create and sustain successful mass-market technologies. The heavy-hitters in the US technology and media industries that recently rallied behind WiMAX will be hoping they have done enough to ensure that they are on the winning side of this adage. And in Europe, Intel’s winning of a license to offer WiMAX services at 2.6GHz in Sweden, along with upcoming 2.6GHz auctions across Europe this year, should make incumbent mobile operators alert to the potential threat from new business models.

The prospects for WiMAX looked decidedly bleak at the CTIA event in March, where a convincing range of devices was noticeably absent amid funding and rollout woes for Sprint Nextel.

But the technology has since received several lifelines. Sprint Nextel announced last week that mobile WiMAX had met its criteria for commercial acceptance. And after months of on-off negotiations, Sprint Nextel and wireless ISP Clearwire recently to form a new joint venture that will combine the companies’ WiMAX assets in the US to create a nationwide network. Additional investment will be provided by three leading US cable companies - Comcast, Time Warner and Bright House - and by Intel and Google.

Having the cable operators as partners could help increase WiMAX adoption and economies of scale as the joint venture tries to exploit a small time-to-market advantage over LTE. In a conference call, Sprint CEO Dan Hesse said the rollout of WiMAX would place it “two years ahead of the competition,” meaning operators rolling out LTE.

The joint venture expects its 2.5GHz mobile WiMAX network to cover an area of the US with a population of 120-140 million by end-2010, which would enable it to serve many of the top 200 US markets.

However, Hesse also said the JV agreement doesn’t bar Sprint from investigating “other 4G options,” which could be taken to mean that Sprint might yet consider LTE as a 4G option for its CDMA network.

Sprint and Clearwire created their new WiMAX company in a bid to create a nationwide WiMAX ecosystem. The deal is valued at US$14.5 billion, based on an investment price of US$20 per share.

Sprint will pool all of its 2.5GHz spectrum and all WiMAX assets into a subsidiary of the new company, called Clearwire, of which Sprint will own 51%. Existing Clearwire shareholders will own 27% of the new company, to which Clearwire will contribute all of its 2.5GHz-spectrum assets.

Comcast will invest US$1.05 billion in the deal; Intel Capital will invest US$1 billion, in addition to its previous investments made in Clearwire; Time Warner Cable will invest US$550 million; Google will invest US$500 million; and Bright House Networks will invest US$100 million, for an aggregate total of US$3.2 billion.

The deal also sees the creation of major new wireless companies.

The new Clearwire will enter into 3G-wholesale agreements with Sprint, becoming a bundled provider of Sprint’s wireless voice and data services. Comcast, Time Warner Cable and Bright House Networks will also enter into wholesale agreements with the new Clearwire, becoming 4G providers of the new Clearwire’s mobile WiMAX service.

Sprint and Clearwire also announced commercial agreements with the strategic investors. Intel will embed WiMAX chips into its Intel Centrino 2 processor and will market the Clearwire WiMAX service with its performance notebook PCs.

Google will partner with the new Clearwire to develop Internet services, advertising services and applications for mobile WiMAX devices. In addition, Google will be the search provider and a preferred provider of other applications for the new Clearwire’s retail products.

Google will also partner with the new Clearwire on an open-Internet business protocol for mobile broadband devices. The future voice and data devices that the new Clearwire provides to its retail customers will be compatible with Google’s Android operating-system software.

Google and Intel each have options to enter into 3G and 4G wholesale agreements with Clearwire and Sprint, respectively, but have no current plans to do so.

Earlier this year, Sprint postponed the launch of its Xohm WiMAX service from April until later in the year. It is now expected to wait until the summer to launch the service, in what is being seen as another blow to the beleaguered operator’s plans to offer WiMAX services.

Sprint says that soft launches in Chicago and the Washington, DC/Baltimore area are progressing well.

For its US$500 million investment, Google earns the opportunity to help the new Clearwire develop Internet services, advertising services and applications for mobile WiMAX devices, and Google will be the operator’s search provider and a preferred provider of other applications. Google and Clearwire pledge to work on an open-Internet business protocol for mobile broadband devices, and the operator will support Google’s Android operating system in its retail voice and data products.

In a separate pact, Google will become the default provider of web- and local-search services for Sprint’s CDMA network. Sprint also intends to load several Google services, such as Google Maps for mobile, Gmail and YouTube, on some handsets and provide more-direct access to other Google services.

It’s reasonable to expect that the long-awaited “Google phone” will finally be launched as a WiMAX device, potentially with cellular chipsets included.

Mobile operators should be braced for new entrants in the wireless-broadband space that are already major brands. They will be offering a whole new business model that will bundle content with fixed-line broadband and telephony - each areas in which cellcos are traditionally weak. Cellcos’ traditional voice offerings could be left looking rather thin by comparison.

As such, the coming together of major players in the US media and telecoms sectors will, for the first time, create an alternative to the cellcos’ traditional way of doing business: tying customers in for long periods of time in return for access to a mobile voice and data network via a single device.

As far as voice is concerned, this model has been an abiding one and will prove to be difficult to dislodge, because it is simple to understand and offers a compellingly simple proposition.

But for data, the prospect might prove to be very different. Operators are only beginning to sell large amounts of data via USB dongles and embedded chipsets, each via the voice subscription model. There is a chance for Intel and other consumer-electronics companies to introduce different pricing models and severely disrupt mobile operators’ data-growth plans.

Recent events in the US and the 2.6GHz auctions in Europe this year should put incumbent cellcos on their guard to defend against the incoming wave of WiMAX-based services and business models.

 
 
 
 
The new WiMAX venture between Sprint Nextel, Clearwire and other players-including Intel, Google and three major cable operators-is big news for both WiMAX and the broader mobile broadband industry.

For WiMAX the deal, which has been in the works for months, is a major shot in the arm at a time when news of delays in Sprint’s WiMAX rollout had the technology and its backers spending more time than they liked in defensive mode.

For the mobile broadband industry the fact that Sprint Nextel and Clearwire brought major cable operators on board-namely Comcast, Time Warner and Bright House-signals that three successful converged operators see WiMAX as the best route to expand from triple-play to quadruple-play services, with the fourth service being mobile broadband.

In addition, Sprint already had a WiMAX deal with Google, but the Internet giant has now significantly increased its commitment by pledging $500 million in funding to the new venture, in exchange for the right to develop and provide Internet applications and services for the new company including search, advertising and its Android mobile operating system.

Bringing Google on board is a huge boost for both the Sprint / Clearwire venture and WiMAX generally. For the venture, Google’s involvement makes it far more likely that its new WiMAX platform will come packaged with compelling new Internet applications and services to help it differentiate in a market where mobile broadband Internet is already taking off via alternative systems such as HSPA and EV-DO Revision A. For the WiMAX industry, landing a significant strategic and financial commitment from one of the top Internet players provides significant validation to the industry’s aspirations to differentiate WiMAX partly by using it as a platform for new open Internet business models, devices, applications and services.

But it’s not all good news, of course. First, at this stage the deal is a ‘proposed transaction’ scheduled to close in the fourth quarter, so there’s obviously a risk it will not go ahead as planned. Sceptics will note that Sprint and Clearwire had a previous venture that fell apart, but on a conference call announcing their new venture the operators stressed that the new venture is different in that all the participants have signed binding definitive agreements, so all that is required to close the deal are shareholder votes and regulatory approval. In contrast, the initial Sprint / Clearwire venture was much less advanced when it was announced, and required a significant amount of secondary negotiation on the terms of the deal, which is where it hit the rocks.

Even assuming that the new Clearwire venture goes ahead as planned, it will be a huge challenge to focus and manage a company made up of seven key partners with very different interests. For example, it would be easy to imagine that internal battles could lead to delays, and there is precedent for this given that the initial deal reportedly suffered many delays. But only time will tell on that one. Certainly the players involved are optimistic that they’ve resolved many of their differences in the initial agreement, and are hoping for smoother sailing going forward.

In addition, the new Sprint - Clearwire WiMAX venture may have more modest rollout plans than Sprint was planning for its Xohm service. Last year Sprint said that its WiMAX service would have a population coverage of 100 million by the end of 2008, and the new Clearwire venture now says it will have population coverage of 120-140 million by end-2010. Although this does not prove a more conservative rollout, it certainly does suggest it. This would also fit with recent news from Sprint that it would not be launching its Xohm WiMAX services in April as planned.

Although Sprint and Clearwire are putting most of the assets and/or funding into the new company, in return for 51 per cent and 27 per cent shares, respectively, the remaining 22 per cent of the company will go to five strategic investors contributing a total of $3.2 billion. The cable operators are investing significant amounts. Comcast is committing $1.05 billion, Time Warner Cable $550 million, and BrightHouse Networks $100 million. They would not be putting that sort of money on the table unless they expected the WiMAX venture to deliver real value in their ongoing battle against the telcos.

Intel is also a big investor, with a $1 billion commitment to the deal, although that is not a surprise. The vendor has already invested billions of dollars in WiMAX and is counting on the technology to help drive sales of everything from notebooks to new device form factors such as Ultra Mobile PCs and Mobile Internet Devices. Intel could simply not afford to see the world’s highest-profile WiMAX deployment-that of Sprint-suffer from a lack of funding, which is rumoured to be one of the reasons Sprint’s WiMAX deployment and launch has been delayed, in addition to the reasons it has cited publicly, which include delays in installing new backhaul, billing and other systems.

Why have the cable operators invested in WiMAX as opposed to one of the more established mobile broadband systems such as EV-DO or HSPA? The simple answer is because the opportunity was there-both Sprint and Clearwire were looking for funding for the WiMAX deployments, and the cable operators have long been interested in moving into mobility. What’s more, WiMAX fits well with cable operator strategy, given that it was designed to be able to support advanced mobile data and video services, as well as voice, meaning that cable operators will eventually be able to offer repacked versions of their existing content and services via WiMAX.

Also, it’s clear that mobile broadband operator Verizon Wireless, which has deployed EV-DO and EV-DO Revision A services, will not be opening its mobile network to cable operators anytime soon, given that its fixed-line affiliate Verizon competes fiercely against them for both voice and broadband subscribers. Verizon has also invested billions to deploy its FiOS fiber-to-the-home service in a bid to leapfrog the cable operators with a blazing-fast bundle of video, Internet and phone services. Similarly, AT&T is not a likely partner, given its longstanding competition with cable operators, its recent major investment in triple-play services via its U-verse FTTH deployment, and the rollout of HSPA services via its wireless unit.

 
 
 
 
If corporate raider Carl Icahn lived in the classic 1954 MGM musical Seven Brides For Seven Brothers, he’d probably step out onto the veranda of his ranch each day to admire the fine, hand-painted Technicolor morning. Then, in response to his wife’s enquiry as to what he planned to do, he’d launch into song:

“Well, my dear…

I’m a goin’ ousting, ousting, ousting, that’s what I’ll do.Corporate jousting, jousting, jousting ’til the day’s through.Gonna buy me a few more million shares, gonna oust that board right outta their chairs,I’ll oust today and oust tomorrow, too.”

Then, as he galloped off to work (on a horse) his wife would cock her head and laugh to herself, saying:

“Dear lord, but my Carl sure does love to oust!”

And doesn’t he just? Not content with securing his strategic objectives at Motorola, Icahn has turned his attentions to web giant Yahoo, where he feels the board has made a significant booboo by spurning the moustache-twirling advances of Microsoft. The software firm turned on its heel earlier this month after the Yahoo board waved away its offer of $34/share, opting to hold out for $37.

Microsoft, bristling from the rejection, has stated its intention to push on unaided in the online search space and Icahn, who bought 50 million shares in Yahoo following the collapse of negotiations, believes the portal has overestimated its appeal. He is not alone in his assessment - other Yahoo shareholders are known to be unhappy with the board’s decision - and this week Icahn announced his intention to nominate a board of his own choosing to replace the incumbents at the firm’s shareholder meeting in early July. His primary objective looks to be persuading Microsoft to resume discussions.

It could be done. Hopeful WiMAX pairing Sprint Nextel and Clearwire were able to sort out their differences, after all. And with both firms putting out results this week, it looks like they have a thing or two in common, challenging Paula Abdul’s assertion that opposites attract. Both firms had a bit of a shocker, to be blunt. Clearwire’s Q1 revenues were up 76 per cent year on year at $51m, on the back of a 72 per cent growth in the customer base, which now sits at 443,000. But losses grew by 90 per cent to reach $176.4m.

Sprint, meanwhile lost $505m for Q1, considerably more than double its Q107 deficit of $211m. Revenues were down eight per cent year on year to $9.3bn, as 1.09 million customers (net) fled the carrier’s network. The Informer wonders what the two firms’ coterie of WiMAX investors - Google, Intel, Comcast, Time Warner Cable and Brighthouse - made of these results, what with them having just stuffed $3.2bn up Sprint and Clearwire’s collective chute.

Speaking of questionable collaborations, US MVNOs Virgin Mobile and Helio are making noises about banding together. On the back of a few days’ worth of rumours this week, Dicky Branson’s US outfit confirmed that it is in talks with South Korea’s SK Telekom which, along with EarthLink, owns Helio.

Opinion out in the industry appears to be divided as to whether this duet will be comparable to The Girl is Mine by Michael Jackson and Paul McCartney (a very bad idea) or Walk This Way by Run DMC and Aerosmith (a very good idea).

MVNOs don’t have the easiest time of it in the US and there have been some high profile disasters involving the likes of ESPN, Amp’d and Disney. Virgin Mobile is the most successful MVNO the world has ever seen but, although its US arm turned a profit for 2007, it had a poor Q4 - traditionally strong for prepaid, youth-focused players as Christmas shopping gets underway. Net adds for the quarter were only 209,669, down from 613,752 for Q406. And the firm itself predicted that churn in Q2 will lead to a net loss in customers for the second three months of the year.

Helio’s no great shakes, either. It’s got a nasty case of the financial trots and has a subscriber base of only around 200,000 people. Why should the amalgamation of two struggling firms create one strong one?

Still, the optimists argue that the target markets are complementary - Virgin goes after the low-spend prepaid youths, while Helio targets the idle rich with its fancy handsets and contracts. And both operations are on the Sprint network, which could possibly lead to a slight reduction in wholesale rates if they start joint negotiations with their host. Either way, it will be a while before we find out - if we ever do - as Virgin is stressing that it’s very early days at the moment.

It’s been all about the get-togethers this week. Alcatel-Lucent has formed a new joint venture company with Indian operator Reliance to provide managed services. AL currently sits third in the managed services vendor rankings, with around seven per cent of the market, according to the industry watchers at Informa Telecoms & Media. It’s a long way off the pace, though, with Ericsson and Nokia Siemens Networks commanding more than 20 per cent apiece.

The growth in managed services is significant for vendors whose kit sales are drying up and it’s a big focus for the Franco-US outfit. But partnering with an operator to build on your existing portfolio is an unusual manoeuvre for a vendor to make. The first contract the new firm is announcing will see it manage the networks of none other than Reliance itself, which is a little odd. Is an ownership stake going to be a prerequisite for all customers?

It’s a novel way for an operator to spread its international reach, though, which is high on the agenda for Indian carriers. The Informer understands that Alcatel-Lucent will shoulder the greater part of the operational burden.

It was party time and the cava was flowing at Spanish carrier Telefonica this week, which reported a 22.4 per cent year on year increase in Q1 profit, up to EUR1.54bn. The firm’s European properties dropped off a little, with revenue sinking 1.7 per cent to Eur3.5bn. It was Latin America - where Telefonica operates in ten markets - that did the business, with revenue growing just over ten per cent to EUR5.16bn.

It’s a region effectively dominated by Telefonica and America Movil, a carrier which - through a series of partnerships - gives Vodafone its presence in the market. The big V extended its tendrils further into Latin America this week, striking a partnership deal with Chilean player Entel PCS. Here’s one for the cellular history buff(s) out there: What is special about Entel PCS? (Answer at the bottom of the page).

Vodafone will introduce a range of push email devices, branded handsets and HSDPA USB modems into the market. Entel places second in Chile, behind Telefonica, which will no doubt be delighted to welcome Vodafone to the market, and will probably pop round with some empanadas on the first night, so Vodafone doesn’t have to cook anything while it’s unpacking. Unattached as it is to a big international group, the deal will probably help Entel as much as it does Vodafone.

In New Zealand, Vodafone is the one laying on the welcome. Hitherto a duopoly, with Telecom New Zealand offering the only competition to Mr Sarin’s people, NZ is set to become a triumvirate market with the news that a third player is entering the fray.

Well, it’s not really a fray, is it? The population of the country is only a little over four million; and half of them seem to be in London, where they’re attempting to watch cricket in the rain. The two incumbents had to release a bunch of spectrum as part of their licence extension deals with the Kiwi G. So now it’s business time for NZ Communications.

Right then, what else? A bit of handset malarkey, perhaps. Research in Motion unleashed its new model on the world this week, which it has named after a laundry detergent. The ‘Bold’ is the first of RIM’s BlackBerry family to support tri-band HSDPA, wifi and GPS.

Like all new, high-end handsets that get launched, it’s been hailed as a response to Apple’s iPhone, partly because of the industrial design that’s all black chrome and leatherette (sounds more like a mid 80s bachelor pad to the Informer). The Bold was apparently delayed somewhat by RIM’s attempts to get the battery life up to scratch, and the firm says five hours of talk time and 13 standby can be expected when the phone hits global markets later this year.

Also, following in the footsteps of Google and Apple, RIM has announced a partnership with Canadian bank RBC and business information group Thomson Reuters to launch the BlackBerry Partners Fund. The initiative is a $150m venture capital fund designed to promote investment in mobile applications and services for mobile platforms.

Meanwhile, those brainstorming sessions at Motorola are finally beginning to pay off, with the news that the firm is launching a new ’silver-pink’ version of the RAZR for the ladies of South Korea. Mind-blowing stuff.

On the OS side, open mobile Linux initiative the LiMo Foundation opened its doors to a handful of new players on Wednesday, including US carrier Verizon.

New additions to the forum also include browser platform Mozilla, as well as Infineon, Kvaleberg, Red Bend Software, Sagem Mobiles, SFR, and SK Telecom, expanding LiMo’s membership to 40 since the foundation’s launch in January 2007.

A not for profit organisation, the LiMo Foundation aims to blend the community-based development benefits of Linux with development practices from the mobile community in a bid to minimise fragmentation - an ambition shared by Android backers the Open Handset Alliance and as well as the LiPS Forum among other Linux collectives.

The collective was launched in January 2007 by six mobile players - Vodafone, Motorola, NEC, Panasonic Mobile, Samsung and NTT DoCoMo.

The last of these - Japan’s leading mobile operator - is apparently interested in kicking its faltering international investment strategy into drive again. Historically DoCoMo has attempted to spread its solutions through minority stakes in operators in Europe and the States, a policy marked by failure. But now the carrier has expressed an interest in Bangladeshi player Aktel, according to local reports.

And that’s about the size of it this week.

Take care

The Informer

Entel PCS quiz answer:

Ay Carumba! You guessed it! Entel PCS was the first GSM carrier to launch on South American soil, earning it a GSMA Gratitude Award in 1998.

Here’s an update on the latest iPhone 3G distribution announcements:

Announced next generation iPhone carriers:

Softbank - Japan

Telefonica - Spain, Czech Republic, Argentina, Brazil, Colombia, Chile, Ecuador, El Salvador, Guatemala, Nicaragua, Panama, Peru, Uruguay and Venezuela

3 - Hong Kong and Macau

TeliaSonera - Sweden, Norway, Denmark, Finland, Lithuania, Latvia and Estonia

Swisscom - Switzerland

Optus - Australia

SingTel - Singapore

Bharti Airtel - India

Globe - Philippines

Vodafone - Australia, the Czech Republic, Egypt, Greece, Italy, India, Portugal, New Zealand, South Africa and Turkey

Telecom Italia Mobile (TIM) - Italy

America Movil - Markets unconfirmed but potentially Brazil, Colombia, Argentina, Paraguay, Uruguay, Puerto Rico, US Virgin Islands, Guatemala, Nicaragua, El Salvador, Honduras, Ecuador, Peru, Puerto Rico, Dominican Republic, Jamaica, and Chile

Rogers - Canada

Orange - Austria, Belgium, the Dominican Republic, Egypt, Jordan, Poland, Portugal, Romania, Slovakia, Switzerland and Orange’s African markets - which presumably means Guinea Konakri, Guinea Bissau, Equatorial Guinea, Senegal, Ivory Coast, Niger, Mali, Kenya, Cameroon, Madagascar, Botswana and the Central African Republic.

Existing iPhone carrier partners:

AT&T - US

Telefonica O2 - UK and Ireland

T-Mobile - Germany and Austria

Orange - France

 
 
 
 
The debate over who should foot the bill for ever-increasing video traffic on broadband networks rages on - now behind closed doors rather than in the press I might add - but content owners and internet service providers appear unlikely to reach a solution soon.

The popularity of the BBC’s iPlayer online-video service has been the catalyst for a debate on who should pay to carry video traffic amid wider discussions about next-generation access networks.

Tiscali has been one of the more vocal ISPs and has called for content owners - particularly the BBC - to contribute towards distribution. This prospect has been dismissed by the Corporation and communications regulator Ofcom has expressed reservations about such a model.

Plusnet, Sheffield-based ISP, which was bought last year by BT, has been offering some fascinating data on iPlayer usage, which will no doubt add fuel to the fire - although that’s not their interntion.

The latest figures reveal that iPlayer traffic accounted for a whopping 10 per cent of internet usage over its network in peak times during March and April.

This is up from between zero and five per cent [of usage] in January, just after iPlayer launched.

Apparently, the 10 per cent figure isn’t drastically different to what other ISPs are seeing either.

Plusnet isn’t moaning about this though.

In fact they welcome the success of iPlayer but said that operators that were unable to meet bandwidth requirements for the BBC service would need to adapt their business models.

And they can’t wait for the launch of Kangaroo as well, as it serves to differentiate Plusnet broadband from the ISPs whose networks are creaking under the weight of video traffic. Plusnet expects iPlayer usage to continue to rise, although not at the same pace.

Plusnet last week increased its usage allowance in response to extra demand for video. Customers who were allowed to download 8 Gigabytes per month can now download 15 Gigabytes, while those who could download 20 Gigabyte can now download 30 Gigabytes. There has been no increase in prices and overnight usage remains free.

Plusnet is a small ISP compared to the likes of BT, Virgin Media and Carphone Warehouse - it has about 300,000 customers - but its philosophy on broadband gives some interesting clues as to how the sector is set for a shake-out.

As Neil Armstrong, the company’s director of product development told me: “Many [ISPs] have a good structure in place [but] those guys that have ‘unlimited’ offers will be in big trouble. Other ISPs need to react.”

Indeed, the ISPs that are shocked by the sudden increase in video traffic on their networks shouldn’t really be surprised. It’s just taken a product like the iPlayer to really get the debate moving.

Chris Wynn covers this issue in greater detail in this week’s New Media Markets.

 
 
 
 
Mobile WiMAX – it’s not a sprint, it’s a marathon. Or, as developments this week would suggest, it’s not a Sprint, it’s a Clearwire. Sprint Nextel’s plans for a nationwide mobile WiMAX network in the US have stalled more than once, not least because of the carrier’s failure to sustain its relationship with wireless broadband provider Clearwire.

But the firm is clearly of the belief that there is safety in numbers, not to mention an awful lot of money. Sprint has persuaded a bunch of other firms – Intel and Google among them, as well as cable providers Comcast, Time Warner Cable and Bright House Networks – to buy into the dream, like some multi-billion dollar version of Dragon’s Den. The new company will carry the Clearwire name and also use the Xohm brand that Sprint developed for its WiMAX operation.

Whether this is letting friends in on a score or simply evidence of the old adage that misery loves company we’ll have to wait and see. Either way, Sprint has turned over 49 per cent of the operation to other investors, retaining 51 per cent for itself. Existing Clearwire shareholders will get 27 per cent, while the newcomers are getting the remaining 22 per cent for a collective investment of $3.2bn.

Individual investments are as follows: Comcast is topping out the fund with $1.05bn, hotly pursued by Intel Capital with $1bn. Time Warner Cable is carving itself a $550m slice, just ahead of Google with £500m, while Bright House is bringing up the rear with $100m.

But the money’s not just buying a share in the business. For its half a billion, Google’s got its feet well under the table, as preferred provider of internet applications to both Clearwire and Sprint, while also finding a guaranteed home for its Android handset platform. The cable guys have sorted themselves 3G and 4G wholesale agreements – a clear defensive play as cellular carriers look to position their services as the only kind of broadband you need – and Intel will be pushing Clearwire’s services in association with its notebooks. Everyone’s a winner…

Well, if the technology works. And assuming, of course, that juggling such a diverse gaggle of stakeholders – each with specific demands that they will seek to prioritise within the operation – will be easy. The Informer rather suspects that it won’t. And if it turns out not to be, the additional funding that this coalition has provided may simply turn out to be a stick with which Sprint gets soundly beaten.

This is all happening against a backdrop of speculation and difficulty for the carrier. Earlier this week, one of Sprint’s largest wholesale customers, Qwest, took its business – and its 816,000 subscribers – over to Verizon and there have been suggestions in the US press that Sprint should and may be looking to offload Nextel, for which it paid $35bn in 2005.

As if this all wasn’t enough, German magazine Der Spiegel this week reported that Deutsche Telekom is looking at buying Sprint Nextel as a means to improve its own position in the US market as it plugs away against Verizon and AT&T. DT’s T-Mobile is some way behind the other leading US players – only this week switching on very limited 3G coverage – and such an acquisition would make it the largest mobile player in the States by some distance. But think about it: A US GSM/WCDMA carrier buying a CDMA player with a half stake in a complicated, multi-sector-owned mobile WiMAX operation and an iDEN gig on the side? It’s going to be tricky to wring much synergy out of that lot.

There was another transatlantic M&A development this week, with UK-headquartered retailer and service provider Carphone Warehouse announcing the sale of 50 per cent of its European and US interests to stateside consumer electronics retailer Best Buy for £1.1bn. Part of the deal will see Best Buy use its share of CPW’s European retail presence to establish a consumer electronics foothold. So Carphone Warehouse could soon be selling TVs and the like.

The UK retailer will contribute its 2,400 European stores as well as its share of its existing relationships with Best Buy. Under the agreement, Carphone Warehouse and Best Buy will each own 50 per cent of the retail business, comprising all the 2,400 stores, the web and direct businesses, the insurance operations, and airtime reselling businesses. Carphone will maintain 100 per cent control of its fixed line telecoms business in the UK, comprising TalkTalk, AOL Broadband and Opal; and its share of the Virgin Mobile France joint venture.

Charles Dunstone, Carphone’s CEO, said, “Best Buy brings demonstrable expertise in merchandising, sourcing and customer service: that should help us accelerate the evolution of our business towards the broader connectivity market. We bring local knowledge, infrastructure and the expertise in linking services to product: that should help them push into larger format consumer electronics retailing in Europe.”

Dunstone said his company plans to use the proceeds of the deal to pay down debt, invest in broadband customer growth and infrastructure, and invest in new areas of growth.

In other international investment news, Indian carrier Bharti has long harboured a desire to take its highly regarded operational expertise on a long holiday overseas. This week the firm confirmed that it is in discussions with South African-headquartered MTN over an acquisition that could be worth $17bn and would create a powerful international player. It stressed that the talks remain at an early stage.

As the largest operator spanning the Middle East and Africa, MTN is something of an obvious target for major investors looking to increase their presence in high growth emerging markets. MTN had a total subscription base of 68.2 million at the end of the first quarter, with operations in 21 countries. The carrier is 76.9 per cent publicly traded on the Johannesburg Stock Exchange, so Bharti would have to make an offer to institutional and private investors to acquire a majority stake in the company.

MTN’s $5.5bn acquisition of Investcom in 2006 expanded its footprint outside South Africa, but many of the markets in which it operates have relatively low penetration rates, making it a prime candidate for an acquisition approach.

There is a major shift underway, the Informer reckons, in the global operator community’s balance of power. Carriers in high growth markets are building impressive scale and looking to export their expertise. You can read all about this in the May edition of Mobile Communications International.

Back in the UK, BT this week unveiled its Broadband Anywhere package, which adds an HTC s620 – branded as the BT ToGo – to the fixed line broadband/wireless router connection. Punters can get 50 minutes of mobile talktime and 50 texts (courtesy of BT’s MVNO relationship with Vodafone) for £5 extra or 600 minutes and 700 texts for £35 extra.

The bundles include unlimited wifi browsing, but there’s a 10MB per month data download on the cellular use. Given that the fastest network technology available on the mobile side is GPRS, this should be ok. Because on a GPRS connection, it will probably take users a month to download 10MB anyway. The Informer can’t understand why there’s no 3G option on this, because not even the GSMA would try and pass off GPRS as broadband.

BT should have a peek at what Mobilkom Austria’s been up to. This week the carrier claimed – in conjunction with Nokia Siemens Networks – to have undertaken the world’s fastest HSPA data call. During the trial, the firms said, the downlink peaked at 10.1Mbps. Which is pretty nippy.

Meanwhile, Nordic/Baltic carrier TeliaSonera – recently the focus of acquisitive attentions from Orange – Norwegian competitor Telenor and Hutchison’s 3 have all won 4G licences in Sweden, where the beauty contest award concluded this week. Never mind your 10Mbps – these guys are talking about 100Mbps. That’s broadband, BT. Capiche?

Still, to be fair on BT, Apple didn’t deem it necessary to launch its iPhone with 3G (although it did have EDGE at least). This week Vodafone – conspicuous by its absence from the first wave of Apple’s distribution partners, announced that it has secured supply rights for the handset in 14 of its markets. Details on timings are yet to appear, but Voda will be flogging the iPhone in Australia, the Czech Republic, Egypt, Greece, Italy, India, Portugal, New Zealand, South Africa and Turkey. The UK and Germany won’t see Vodafone offering the handset, presumably because of exclusivity deals that Apple has with O2 and T-Mobile respectively.

It strikes the Informer as likely that Vodafone won’t be offering the current iteration of the device, given that the carrier has always had issues with the absence of 3G connectivity. Last September, the Informer spoke to Jens Schulte Bockum, Vodafone Group’s global director of terminals. While he heaped praise on the handset in terms of its interface and design, here’s what he had to say on its connectivity:

“We think the fact that the current iPhone is not supporting HSDPA or 3G broadband is a serious omission. Whether you use an EDGE network of GPRS, the 2G internet experience from the iPhone doesn’t really leverage the intrinsic device capabilities from a browser perspective. It is not as compelling as one would have thought it could be. Especially if you benchmark it against the wifi experience.”

The iPhone is popular with the youth, of course. And it seems these days that if you want to connect with the youth, you have to meet them on their own territory. So it emerged this week that His Holiness the Pope will be using text messages to contact young Catholics when he attends World Youth Day in Australia later this year. Perhaps something along the lines of: ‘U W8 til ur married :o(’

Benedict XVI will be marshalling a range of youth-oriented technologies to spread the word to the youngsters, including digital prayer walls and a special social networking site, a bit like a Catholic Facebook. The latter, presumably, will see users being ‘poped’.

It is a fact that his namesake, the actor Dirk Benedict, who didn’t do so badly communicating with the kids himself, through his roles as Face in the A-Team and Starbuck in Battlestar Galactica, lit on his stage name while he and his agent were in a restaurant trying to decide what to have for breakfast. On seeing Eggs Benedict, the decision was made.

The Informer can’t help but wonder if the Pope, likewise, chose his own handle by scanning the Vatican brunch menu. It must have been a tough call but, in the end, Pope Pancakes probably wouldn’t have worked. (With Papal syrup? Ed.)

Take care,

The Informer