Mobile advertising is almost ten times more effective on young consumers than other forms of advertising, according to research released by mobile ad firm JumpTap.

On Thursday the firm announced the results of a study which it commissioned from Research and Analysis of Media (RAM), carried out over a sample group of 300 Swedish TeliaSonera mobile users.

RAM discovered that the impact of mobile advertising on the 16-24 age group was significant, with 9 per cent responding that they would likely make a purchase. This compares to a likelihood of 0 per cent on other forms of advertising. Female users also proved susceptible to the mobile medium, and are apparently twice as likely, at 15 per cent, to make a purchase following a mobile ad than any other kind.

The research also revealed a greater recall rate for brands advertising on mobile platforms. Although approximately one third of respondents had no familiarity with the advertisers beforehand, around 10 per cent of 16-24 year olds and 28 per cent of 45-79 year-olds stated they would seek out more information on a brand following a mobile ad. This compares to 0 per cent of the 16-24 age group and only 13 per cent of the 45-79 age group who would look for more information after seeing other advertisements.

The claims tally with those of ad funded MVNO Blyk, which has announced average advertising response rates of 29 per cent. Compared to other forms of mass market advertising, this figure is phenomenal, against a 0.5 per cent response rate for online advertising and 4.5 per cent from unprofiled SMS.

However, industry analyst and telecoms.com parent, Informa Telecoms & Media, recently warned that mobile advertising has yet to convince the big hitters. The analyst revealed that the majority of early adopter big brands are yet to transfer more than 0.5 per cent of their advertising budget onto mobile.

But while this is in part down to the much maligned issues of non-existent measurement and premium pricing associated with early formats of mobile advertising, the analyst argues that these are short term hurdles and forecasts that the global mobile advertising market will rocket from $1.72bn in 2008 to $12.09bn by 2013.

A meeting of minds between the Middle East’s media and telecoms industries is still some way off, it emerged at the Arab Advisors Group’s Media and Telecoms Convergence conference in Jordan’s capital, Amman, last week.

Some operators have major doubts about the prospects for delivering media content over telecoms networks in the region. “Content seems very exciting, but how do you make money out of it?” said Peter Kaliaropoulos, CEO of Batelco. “We need to work that bit out. The question should be how to create a market for content that currently doesn’t exist in the Middle East.”

For telcos in the region, the amount of revenue that will come from content is likely to be small, and the scarcity of revenues will make it difficult to justify the expense of content development and acquisition to investors, according to Kaliaropoulos.

Some other operators see the convergence between media and telecoms as inevitable. “The trend is for everything to move to mobile: the Internet, TV,” said Mickael Ghossein, CEO of Orange Jordan.

Change is under way regardless, according to Du CEO Osman Sultan. “There has been a shift from the promise of ‘mobility for everyone’ to a promise of ‘everything everywhere,’” he said. “We are saying to customers, ‘You can carry your whole life [on your mobile device].’”

Even the skeptics seem to acknowledge the risks of staying on the sidelines: Despite its doubts about convergence, Batelco plans to set up a division to acquire or develop content for its various operating businesses.

But the convergence of media and telecoms brings together two completely different sets of players, each of which is moving from a position of “unshared certainties” to one of “shared uncertainties,” Sultan said.

If telcos are to offer content, they need the expertise of the media companies, according to Sultan. “We don’t know anything about content,” he said. “Those people [media companies] have spent 100 years learning how to deal with artists and singers.”

But, Sultan said, it is evident that people will not watch full movies and soccer matches on a mobile screen, because it is too small. Simplicity is vital too, he said, because 85 per cent of people who have tried mobile TV stopped after the first attempt because it was too complicated.

Sam Barnet, COO of MBC, the largest broadcaster in the Middle East, with 82 million viewers a day, made similar points. People are generally put off by difficult technology, so telcos need to make it easy for users, he said. A DVB-H system the user can turn on and watch immediately might be better than a 3G system that takes time to load.

In addition, the mobile platform requires different types of content compared with conventional TV. “Delivering the same TV content that you watch on a TV set probably isn’t the way to do it,” Barnet said. So MBC has asked Al Arabiya to make five-minute news programs for mobile, while MBC itself is creating five-minute versions of its popular 30-minute TV comedy show Tash Ma Tash. MBC also recently bought a Riyadh-based company that produces content specifically for the web and mobile.

Telcos developing mobile TV offerings should bear in mind the fact that Middle East audiences are reluctant to pay for TV. Despite the proliferation of satellite channels, the region has only three pay-to-view broadcasters - Showtime, ART and Orbit - and they account for only a small part of the overall TV market. “The Middle East broadcast market is predominantly free-to-air,” Barnet said. “Pay-to-view is very small. So telcos are going to find it very difficult to charge for TV services.” And the TV advertising market in the Middle East is also small, so if telcos are hoping for a share of the advertising market, they might be disappointed.

Also, Middle Easterners typically do not commute to work via public transportation to the extent that their counterparts in Europe and East Asia do, which removes one key opportunity for engaging with mobile content.

Telcos will find it difficult to go it alone in TV, according to Barnet. “Should telcos create their own TV brands and bring them to market?” he said. “I don’t think they should.” Telcos that have tried to do so in other parts of the world have struggled, he said.

But there might be scope for MBC to extend its brand into the telcoms sector. Asked whether MBC might launch an MVNO, Barnet said: “MBC has strong brands that are suitable to those of large cellcos. That’s all I’m saying.”

 
 
 
 
As expected, California’s king of cool gadgetry, Steve Jobs, delivered the goods on Tuesday.

It’s got tri-band HSDPA; it’s got GPS; it costs just $199 or free and it’ll be here next month. Yep, it’s the next generation iPhone.

During the opening keynote for the Apple World Wide Developers Conference, held in the Moscone Centre in San Fransisco this week, Apple frontman Jobs unveiled the latest incarnation of the iconic device.

The iPhone 3G will be available in more than 70 countries later this year, with rollout beginning on July 11 with 22 countries - Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Mexico, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, UK and the US.

The gadget will come in two sizes and will be subsidised by carriers, so the 8GB model is priced at $199, while the 16GB unit costs $299.

The previously announced iPhone 2.0 software includes support for Microsoft Exchange ActiveSync and runs the hundreds of third party applications already built with the recently released iPhone SDK. An enterprise focus means contact and calendar syncing as well as remote wipe and Cisco IPsec VPN for encrypted access to corporate networks.

Jobs assured the industry the 3G unit also supports easier multitasking with simultaneous voice and data communications, as well as intelligent switching between wifi, EDGE and 3G to provide the optimal connection at all times.

A new battery means ten hours of talk time on 2G networks and five hours using 3G, with up to five to six hours of web browsing, up to seven hours for video playback and up to 24 hours for audio playback.

A plethora of mini updates include mass move and delete multiple email messages, search for contacts, a new scientific calculator, parental control restrictions for specified content, and taking a leaf out of Nokia’s book - MobileMe. This is an internet service that pushes email, contacts, and calendars from an online “cloud” to native applications on iPhone, removing the need to manually check email and wait for downloads, whilst contacts and calendars on any Apple device are synced and continuously kept up to date. Users can also take photos and post it directly to a MobileMe Gallery online.

The new gadget also includes the App Store, which allows users to purchase and download applications wirelessly and instantly. The App Store will be available in 62 countries at launch.

Click here for a list of countries in which the iPhone will be available

 
 
 
 
The meaning of “open” is in the eye of the beholder. Clearly the mobile communications industry is opening up to new ideas, business models, device concepts and the like, but is it becoming truly open? With so many competing commercial interests, not to mention legal and regulatory issues, efforts to really change the business face numerous hurdles.

At Qualcomm’s BREW 2008 conference last month in San Diego, Qualcomm announced efforts to further open its highly successful BREW mobile platform. Openness appeared to be executives’ mantra as they discussed the integration of Adobe Flash into the BREW Mobile Platform and the introductions of Plaza - Qualcomm’s new platform-agnostic widget framework, based on open standards that use the BREW service-delivery ecosystem - and the year-old BrandXtend platform for off-deck content. “Opening up BREW helps us and you in the delivery of new services,” Andrew Gilbert, executive vice president and president of Qualcomm Internet Services, MediaFLO Technologies and Qualcomm Europe, told BREW developers.

But amid this spirit of openness were murmurs of discontent regarding the high level of scrutiny applied by Qualcomm to the demonstration devices, speaker presentations and marketing materials at BREW 2008. Qualcomm reportedly told BREW participants that the company had to be extra careful, because of the cease-and-desist order imposed by the US International Trade Commission on the marketing of devices that include Qualcomm chipsets deemed to infringe a Broadcom patent.

But some exhibitors told me that some handsets that had recently been shipped to the US and were being sold there - meaning the devices had ostensibly been allowed into the US because they did not conflict with any legal rulings - were not allowed to be used in demonstrations. They also said that every speaker’s presentation had to be approved, and sometimes edited, by Qualcomm before the event. Qualcomm even insisted on inspecting, and potentially rejecting, every piece of marketing material destined for booths on the show floor, the exhibitors said.

Such actions make one question Qualcomm’s interpretation of the word “open” as it relates to the free flow of ideas, particularly when exhibitors and speakers were whispering about the “Qualcomm police” and “censorship that was truly stunning.”

Qualcomm apparently felt that it had to make these moves to protect its interests, which is something every company in a free-market society must do to survive and compete. And Qualcomm’s not the only company that’s touting an open approach but leaving some to wonder just what the term is supposed to mean.

Take Google. Its Linux-based Android operating system and the company’s backing of the Open Handset Alliance to help push Android and its own vision of mobile industry openness have been part of a full-scale campaign to turn Google into the poster child for all things open, including open-source platforms and open access.

But is Google really interested in altruistically opening the industry to all, or is it merely staking out its own beachhead?

Arun Sarin, former chairman of Vodafone, has said that the Android OS is “open for Google” only. He has also expressed concerns regarding plans Google might have for the user data that it could amass via Android-powered handsets.

At the BREW show, an executive with a white-label-search-engine company told me that Sarin has been trying to warn the industry after learning from his mistake in choosing Google as the search engine for Vodafone Live users with 3G handsets. When the deal was announced in February 2006, Vodafone basically gave away its brand and valuable handset-screen real estate to the largest Internet search engine, a mistake guaranteed to haunt Vodafone’s branding efforts for years to come and help Google continue to build a mobile user base that it can profit from.

And Google is still signing favored-partner deals with mobile operators, which is hardly an open approach to business. For a US$500 million investment, Google earned the opportunity to become the official search provider and a preferred provider of other apps for the new Clearwire - the WiMAX joint venture of Sprint Nextel and Clearwire - which will also support Android in its retail voice and data products. Google has also been named the default provider of web- and local-search services for Sprint’s CDMA network.

Obviously, most companies want an “open” environment that suits their needs but not necessarily other firms’. In addition, there are numerous challenges - technical, legal and political - in creating a fully open mobile communications environment. Many are talking the talk, but we have yet to see whether any will walk the walk when it comes to throwing open the doors to their end of the mobile business.

 
 
 
 
Earlier this year, US carrier Verizon Wireless (VZW) was suing its competitor Alltel over false advertising. Relations were decidedly frosty. Now, as if in the telecoms version of seminal rom-com When Harry Met Sally, they’ve gone and got it together, after Alltel faked a noisy orgasm in a restaurant. Vodafone - which holds a 45 per cent stake in VZW - confirmed the acquisition on Thursday, which will see VZW gobble up Alltel and its 13 million subscribers for $28.1bn.

Assuming no obstacles, the move will enable Verizon to reclaim its position as the largest US carrier, which it ceded to AT&T following that firm’s merger with Cingular in 2005. Arun Sarin, whose time at Vodafone is coming to a close at the end of next month, was chipper about the acquisition: “We expect the acquisition of Alltel to significantly increase the value of our 45 per cent interest in VZW through the realisation of substantial in-market synergies and to reinforce its leading position in the world’s largest mobile market by revenues. Whilst VZW’s free cash flows will initially be deployed in reducing net debt, the VZW Board has agreed to conduct an annual dividend review process and to the payment of enhanced tax distributions.”

More than once Sarin has faced calls to dispose of its VZW stake in light of Verizon’s unwillingness to yield to Vodafone’s MO of ownership rather than partnership. Perhaps he’ll feel that this latest manoeuvre is further proof of concept, even though an expected dividend from VZW will be unlikely to go Vodafone’s way any time soon, now that the acquisition has been announced.

There was less success for France Telecom in its bid to acquire Baltic specialist TeliaSonera this week. The Swedo-Finnish JV flipped FT the bird in umbrage at the French firm’s assessment of its value, with the offer pitched at EUR27bn and change.

“TeliaSonera is a strong business with excellent growth prospects in its own right,” said a bristling Tom von Weymarn, chairman of TeliaSonera. “The board and management are focused on developing the company to its full potential, driving strong and sustainable earnings growth and maximising value for all shareholders. The indicative price of SEK56.225 per share significantly undervalues this potential,” he concluded. Which suggests the firm may be open to an improved offer.

Meanwhile, it’s really annoying, isn’t it, when you get a song stuck in your head? Even a really good song gets tiresome in the end. So you can imagine how the Informer’s been feeling this week, he just can’t get rid of the Rockwell classic Somebody’s Watching Me: “I’m just an average guy with an average life. I work from nine to five, hey hell I pay the price.”

We’re not so much sleepwalking into a surveillance society, as being accompanied by a marching band. This week the news broke that 100,000 EU citizens have had their movements tracked in the name of research. The analysts logged the location of the nearest base station every time a call or text was sent or received by their guinea pigs and arrived at the earth-shattering conclusion that, guess what, people tend to go to the same places day after day. Most people don’t travel very far, although some people do. The research doesn’t prove that they ate some food at lunchtime and slept all night, but the Informer is willing to bet most people surveyed did.

If you missed out on all the surveillance fun, fear not, for those bastions of personal data collection, MySpace, Facebook and Bebo, are offering social networkers the opportunity to Sniff their friends. It’s the LBS equivalent of poking. Sniff stands for Social Network Integrated Friend Finder, and is not even remotely a new idea, but the social networks are getting behind it, so perhaps it stands a better chance of punters’ buy-in than previously launched friend finder services. Although, apparently each Sniff will cost 50p. Which is considerably more than a text or indeed a call, which is the mode of friend-finding the Informer generally prefers. It’s faster, cheaper and much more accurate.

The social networks will be hoping that the Informer’s assessment regarding the likely chances of success of Sniffing are wide of the mark. Particularly in light of the revelations of a recent eMarketer report UK Social Network Marketing: Ad Spending and Usage which reckons ad spend is not as high as anticipated. The report says £65m was spent on social network advertising in 2007 and this will have increased to £115m by the end of this year. It might sound like a fortune to the average Joe, but speaking to UK newspaper the Guardian Kirs Oser, director of strategic communications at eMarketer, described the amounts as “tiny”.

If Oser thinks that the spend in social network advertising is tiny, the Informer shudders to think what he’d make of mobile advertising. The analysts here at Informa Towers reckon the big brands are yet to transfer more than 0.5 per cent of their advertising budget onto mobile. It’s not all bad news though, Informa Telecoms & Media, forecasts that the global mobile advertising market will rocket from $1.72bn in 2008 to $12.09bn by 2013.

If the operators want to get their hands on the folding money they’re going to have to become service enablers according to research house Analysys Mason. The advice to operators has a familiar ring. They’ve long resisted becoming bit pipes, but there is clear trend towards open mobile internet access and all you can eat tariffs.

“Mobile operators are best placed to become service enablers in the content value chain by exploiting their unique assets, which focus on transmission, billing and consumer insight,” said Mike Grant, analyst with Analysys Mason. “These assets are essential to the success of content providers in the MME (mobile media and entertainment) market, and the ’service enabler’ revenue streams (including traffic, billing and advertising revenue) appear to be the most sustainable for mobile network operators in the long term.”

Along with opportunities, though, come threats. And the operator community has plenty of those in the shape of the vendors. This week Microsoft announced its intention to have another crack at the mobile services market. The Redmond Giant has unveiled something it’s calling the Connected Services Accelerator Program - a collaboration with independent software vendors, developers and operators.

“Our mission for the industry is to drive the transition to Telco 2.0, a new era of communications where service providers are delivering hundreds if not thousands of new services,” said Martha Bejar, corporate vice president for the Communications Sector at Microsoft.

A separate mission for the firm is to try and convince everybody that Windows Mobile devices are better than iPhones, ahead of the widely anticipated unveiling of the 3G version of Apple’s handset next week. One of the firm’s marketing folk emailed the Informer this week with a long list of reasons why Windows Mobile handsets are superior, including security, price, battery life, variety and developer access.

These may all be genuine benefits, but it just makes it sound as if Microsoft is running a bit scared of Apple in the mobile device space. Besides, Apple’s principal marketing hook is that the iPhone is cool - after all a rubbish camera and anachronistic access technology didn’t harm sales of the first model.

Meanwhile, industry analyst Strategy Analytics has said that Nokia, RIM and Apple are the first handset vendors to realise that global handset revenues are approaching a peak and fresh growth streams must be found in mobile services.

Gartner, though, thinks otherwise. It’s changed its mind (a bit) regarding the potential for laptops embedded with 3G capability. The analyst maintains that, to date, embedded 3G capabilities for laptops has been difficult for enterprises to justify because of upfront purchase prices, monthly running costs and asset protection. But the firm concedes that with new pricing plans and technology evolution, the tide is turning. Sadly, built in 3G capability will kill the need for dongles, and the English language will lose one its more agreeable recent additions.

Gartner’s change of heart is fine though, the Informer recognises that sometimes the goalposts move. Then again, sometimes the goalposts are bricked up completely, and nowhere more so than in the UAE. The Informer isn’t sure whether he has many readers in Dubai, since he sometimes says things that the region’s rulers might not like. Censorship is far from unknown in the region. But if you are reading this in Dubai you can always call the Informer up, taking advantage of Du’s new cheap international calling tariffs. You’ll have to use those tariffs, because the pesky operator has followed in the footsteps of Etisalat by blocking Skype services.

Taking advantage of a filter that was put in place to protect residents from pornographic or offensive material, according to local reports, Du now prevents users from accessing cheaper mobile VoIP services.

The residents of Russia though will have no such problems. Open wifi champion Fon has signed a deal to expand into the country that seems to have turned its back on state-controlled Big Brother in favour of his more flamboyant, no more agreeable sibling Rampant Consumerism. (Dubai seems to manage both systems simultaneously). Comstar said it plans to establish 30,000 wifi access points in Moscow in 2008-2009 before expanding to other regions.

Fon’s business model is described by the firm as ’social routing’. Subscribers connect the Fon device to their own broadband connection and then choose whether to share and share alike their wifi with other Fon users or charge others for access (sharing the spoils with Fon). It would be fair to say that the idea has yet to really take off. The Informer was sent a Fon hotspot to try and he can confirm it makes an admirable door stop.

It’s shake-up time at Orange UK as new CEO Tom Alexander has announced plans for an overhaul. The firm will be divided into to principal segments - Consumer and Business - both of which will be supported by a new Sales & Loyalty layer. He’s also created a New Business, Wholesale and Strategy team.

The upshot is bad news for middle management, with 450 jobs up for the chop. But there’ll be a net increase in headcount (if not wage costs) as Orange plans to employ 500 new, customer facing staff by the end of the year. It’s vowed also to open 60 new high street stores and shift its off-shore customer service teams back to the UK, as well as deploy a further 450 GSM cell sites and accelerate its HSPA deployment strategy. Promises, promises.

Take care

The Informer

 
 
 
 
The world’s biggest handset vendor, Nokia, and two outsiders, RIM (BlackBerry) and Apple, stand to gain most by pioneering fresh revenue streams for the mobile handset industry with their emerging push into value added services such as navigation, email and music.

Industry analyst Strategy Analytics said Wednesday that Nokia, BlackBerry and Apple are the first handset vendors to realise that global handset revenues are approaching a peak and fresh growth streams must be found in mobile services.

It’s been well documented that a cocktail of promising applications for wireless consumers is already emerging, such as GPS navigation from Nokia, push email from BlackBerry and music from Apple.

Current revenues from the respective strategies of all three vendors are modest, but growing. Chris Ambrosio, executive director of wireless at Strategy Analytics, said: “We estimate Nokia generated less than one percent of global revenue from its Ovi services sub-brand during 2007. Sales may be tiny, but they are growing.”

Strategy Analytics estimates that Nokia’s VAS proportion can realistically achieve 5 per cent of turnover by 2012. “The real impact of Ovi, and other content offered by handset vendors however, will be in increased shipments of profitable, rich-media smartphones that will be necessary for accessing these advanced services,” said Ambrosio.

The news comes just as Nokia is reported to have struck a revenue sharing deal with Buongiorno, the world’s largest mobile content provider.

Having added previously resistant pan-European carriers Orange, T-Mobile and Vodafone to its growing list of Ovi services customers, Nokia is now seeking to boost its blossoming content and services strategy further. In October, Nokia made its largest ever acquisition, buying Navteq, a US mapping and navigation company, for $8.1bn, effectively sewing up that corner of the market.

The Finnish vendor is understood to be adding Buongiorno’s BlinkoGold mobile site, which carries video, music, graphics and games, to ten device models, including the N95, N70 and N82.

Italy-based Buongiorno, which is listed with a market capitalisation of Eur200m, appears to be betting on this latest deal to help it achieve its 2008 revenue target of Eur330-350m, almost double its 2007 figure of Eur175m. The firm has redesigned its software in preparation for the next level of mobile content services, including social networking and targeted mobile marketing.

Last month, telecoms.com parent and industry analyst Informa noted that the focus is moving away from a limited number of services provided by the operator to internet access and operators’ non-SMS data revenue base is in the process of shifting from services to basic access. The services users are beginning to use on their mobiles are provided by internet players rather than mobile operators.

As such, the analyst expects that mobile operators can look forward to a period of growth in mobile broadband connectivity. But to capitalise on this opportunity, operators need to invest heavily in new high-capacity networks, effectively marking a transition to becoming ISPs. To avoid the fate of fixed-network ISPs, mobile operators will then either need to partner with internet firms and share revenues and/or develop a smart-pipe strategy. This involves ‘exposing’ different parts of their networks to third party service providers and monetising access to them.

 
 
 
 
China’s government has finally announced details of its restructuring of the local telecoms market, bringing to an end years of speculation, rumors and theorizing about its content.

Ironically, the announcement was somewhat of an anticlimax, because the details of the exercise matched those that had been steadily leaked by the government since the beginning of the year.

Nonetheless, the restructuring remains one of the biggest stories of the year, because it is unlikely that any other government would so brazenly move its major telecoms players around like pawns on a chess board.

Under the broad terms of the plan, mobile market giant China Mobile will acquire small fixed-line player China Tietong (formerly known as China Railcom), and leading fixed-line player China Telecom will buy the CDMA-network operations of second-ranked mobile operator China Unicom. China Unicom will maintain its GSM operations but merge with second-ranked fixed-line operator China Netcom.

On announcing the restructuring, the Ministry of Industry and Information (MII), the Ministry of Finance and the powerful National Development and Reform Commission (NDRC) said it was designed to address the unbalanced competition in the telecoms market, in which China Mobile and China Telecom dominate their respective sectors against much weaker rivals.

The three bodies also said they hoped the restructuring process would create three strong, integrated operators that would all be allocated 3G licenses.

But the sting in the tail came via a comment in the bodies’ joint statement: that they wanted the restructuring process to “focus on self-developed technologies and their application, so as to improve the nation’s innovation capabilities.”

Peeling back the bureaucrat-speak, this means that the three groups want homegrown 3G technology TD-SCDMA to be as widely adopted as possible, and this is the most crucial part of the entire restructuring imbroglio.

China Mobile would still be the most powerful operator by far in the market after the restructuring exercise, and might be even more powerful, in light of its acquisition of China Tietong’s fixed-line assets.

By contrast, the prospects for China Telecom as a CDMA operator remain sketchy: The firm has little experience in the wireless space and cannot be expected to develop overnight into a fearsome competitor to market giant China Mobile.

The China Netcom/China Unicom merger is similarly fraught with potential difficulties, given the complexity of integrating two huge companies with thousands of employees and billions of dollars of assets.

The creation of a three-player market will not on its own be enough to bring parity to the telecoms market and slow down China Mobile’s domination, especially since the government’s proposed “asymmetric” regulatory policies look far less interventionist than those implemented in other markets, South Korea in particular.

The real threat to China Mobile comes from not knowing how far the government will go in using the company to push TD-SCDMA into the market.

Most analysts agree that China Netcom/China Unicom will be granted the much-prized WCDMA license, while China Telecom will receive a 1xEV-DO license for its CDMA network. And as the strongest player in the market, China Mobile will receive a TD-SCDMA license, analysts say.

Some analysts suggest that because of TD-SCDMA’s less-than-stellar performance in trials, the government will accede to China Mobile’s wishes and grant it a WCDMA license alongside its TD-SCDMA one.

China Mobile would then be able to roll out a nationwide WCDMA network followed by a much smaller TD-SCDMA network, based mainly around the largest cities. This would create huge capex savings by removing the need for two nationwide networks.

Sounds like an ideal solution, right? Not so fast.

The mainland government is certainly not naive enough to have deployed vast financial and political resources to develop TD-SCDMA, only to allow China Mobile to shuffle the technology toward the back door by granting it a WCDMA license.

TD-SCDMA is not necessarily the government’s last chance to push a homegrown mobile standard: Domestically developed LTE TDD-based technologies are a possibility, but not for a while.

China is about five years behind the rest of the region in deploying 3G services. It is clear that any move toward LTE is still a long way off and that the government would be reluctant to allow foreign technologies, such as WCDMA/HSDPA and EV-DO, to have the market completely to themselves, even in the medium term.

The government clearly sees the restructuring as a watershed in the telecoms market and might well choose this moment to make a powerful stand on TD-SCDMA by forcing China Mobile to go it alone with the technology, at least for an initial period, to give TD-SCDMA the best chance of mass adoption.

What’s important to remember is that although China is far behind in TD-SCDMA development, senior members of the government - well above the level of those calling the shots at the MII or NDRC - are pushing hard for locally developed technologies to be advanced at the expense of foreign rivals’.

The MII and NDRC would be loath to open themselves to embarrassment in front of their political bosses by allowing TD-SCDMA to be sidelined by China Mobile. They see it as a political obligation to give the technology the best possible chance of success.

That does not, of course, mean the government is willing to risk destroying China Mobile’s intrinsic value by subjecting the firm to onerous obligations with respect to TD-SCDMA.

But it does mean the government will expect the operator to do its part to make TD-SCDMA a success, given that it has enjoyed such a favorable regulatory ride in the past decade, which is what helped turn it into such a giant in the first place.

 
 
 
 
European mobile operators have raised the price of roaming calls into the European Union by as much as 163 per cent as they seek to offset losses from reduced charges within Europe.

The introduction of the Eurotariff in June, and its enforcement in September, capped European roaming charges at 49 eurocents per minute for calls made abroad and 24 eurocents for calls received abroad, excluding VAT, hitting operator revenues hard.

As a result, analysts at telecoms.com parent, Informa Telecoms & Media, reveal that operators have jacked up their roaming charges outside Europe to make up the shortfall.

European regulators have no legislative powers to regulate the cost of roaming outside their own territories, but they say they are well aware of the situation and are considering ways of remedying it.

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.”

The EC said it is concerned about the price hikes but is powerless to legislate outside its domain. Meanwhile, UK regulator Ofcom is working with the European Regulator Group (ERG), which represents regulators both within and without the EU, to “monitor the situation”.

 
 
 
 
The recent announcement by France Telecom’s Orange that it has reduced its data-roaming tariffs demonstrates that the industry has a lot to do when it comes to addressing the perceived problem of high data-roaming costs.

Orange’s move is evidence that operators are concerned about the European Commission’s decision to continue looking closely at roaming prices. In the absence of major reductions to data-roaming tariffs, the EC is poised to mandate a reduction to them in July.

But although Orange’s cut in data-roaming costs is welcome, in that it will make such services cheaper for some Orange roamers, it fails to reduce them enough.

To head off regulation on data-roaming tariffs, operators are taking the initiative in cutting them, just as they did with voice-roaming rates before the European Commission introduced the mandated Eurotariff. The Eurotariff, which came into effect June 30, capped roaming prices at ?0.49 ($0.77) a minute for calls made within the EU by subscribers of European mobile operators.

At the same time, perhaps sensing that regulation of data- and SMS-roaming rates is inevitable, Boris Nemsic, CEO of Telekom Austria Group, said last week that “it is worrying that at a time when the long-awaited benefits of mobile data are beginning to be felt in the European marketplace, the Commission is considering more price regulation.”

Nemsic said that Austria’s market and others are functioning well without additional regulation, because when volumes go up, prices come down. In less than a year, data-roaming prices have been cut in half, Nemsic said. He said that one megabyte of data use while roaming costs ?0.42 with Mobilkom’s daily and monthly roaming packages and ?2.40 without a specific data-roaming tariff.

“Take a look at Austria today, and you’ll see the European price levels of tomorrow,” he said. “Extrapolate this price development over the next two to three years, and sending e-mails, receiving MMS or using specific data services, such as telematics or mobile navigation, when abroad will cost close to nothing.”

Operators have made some moves in the right direction and look set to reduce data roaming tariffs, but such measures will probably fall short of the scope of reductions that the EC says it wants to see. It was a similar situation that led to the introduction of the Eurotariff.

The EC reportedly wants interoperator wholesale prices for data roaming services set at ?0.35 per megabyte. They currently stand at about ?1. And it wants SMSes sent while traveling in the EU to cost ?0.12. The average in Europe is about ?0.29.

At the Mobile World Congress (MWC) in February, Viviane Reding, the EC’s telecoms commissioner, said that the EC would “take stock” of data-roaming prices July 1. “We’ll put the current SMS-roaming prices on a web site” and then “go to the European Parliament and Council of Ministers and give them an answer on what has to be done with data,” she said.

The EC “won’t be satisfied with only a few large operators [making reductions],” she added. “July 1 will be the moment of truth. Operators know perfectly well that if the movement isn’t right, the EC will be ready to regulate.”

Although the EC is most likely to regulate only SMS roaming rates in the near term, it might also address data roaming July 1, and if not, it will do so soon. So how will the EC react to the latest roaming-rate cuts from Orange and others?

Orange announced a fixed-price data-roaming tariff May 19, Travel Data Daily, under which users pay a fixed price for data roaming. The service costs Eur12-15 for 50MB of daily Internet access within the EU.

Orange is not the only operator to make reductions in data-roaming rates under close scrutiny by the EC.

Mobilkom owner Telekom Austria, which owns mobile operators in southeastern Europe, last week reduced its SMS-roaming rates another 20% in Austria, to Eur0.20 per SMS, and almost 40% at Mobiltel in Bulgaria.

On the subject of SMS roaming, Nemsic said that “when it comes to standard tariffs, we already have very competitive SMS levels today compared to national tariffs.”

Many cuts have already been made this year. For instance, at the MWC, T-Mobile unveiled a Pan-European flat-rate data offering of Eur15 a day for a laptop using any network in any EU country. Usage is capped at 50MB a day, resulting in a cost per megabyte of Eur0.30. The company says it will also launch a tariff of Eur2 per megabyte in all markets later this year.

Vodafone, meanwhile, announced a price reduction of up to 45% on its monthly data-roaming tariff, but only for European business travelers. In June, it is planning to lower the maximum charge for its monthly data-roaming bundle from Eur75 to Eur60 a month.

But these efforts, and others like them, important as they are, are unlikely to stop the EC from intervening to force operators to lower data-roaming prices.

Operators seem set on keeping data-roaming rates higher than the EC wants them, preferring instead to reap the benefits of higher prices until forced to cut them.

Meanwhile, it is only a matter of time before European regulators start to question operators about why roaming calls to and from countries outside the EU are so expensive. The European Regulator Group, which represents the regulators of both EU and non-EU European countries, says it is “monitoring the situation.” It is surely only a matter of time before the price of data roaming in the EU and roaming calls made and received outside the EU are set by the European Commission.