Friday, February 25, 2005
Andy has posted Popular Telephony's patent application to his site, and just when I was worried about not having enough weekend reading. It's easy to understand some of the skepticism which has surrounded the company in the absence of a public release, but this should provide some additional substance to PT's claims. The other thing which seems to get forgotten is that the chipmakers are deeply involved here. I can't see them, or the various phone and gateway makers, for that matter, risking public association with something that turns out not to work.
The old M&A cash register has been ringing loudly across the pond, but what's the outlook for Europe? My colleague, currently listening to the Telecom Italia conference call, just leaned over and said that TI management are looking for acquisitions to grow in the French broadband market. She then pointed out that the company is due EUR1bn for Latin American disposals in a few months' time. They could do a lot with EUR1bn, or thereabouts (and a previous Bloomberg story has linked them to a potential purchase of Tiscali France. TI also unveiled plans to launch 4Mbps DSL with the modem and a DTT tuner residing in the same box (as I have long expected) in four cities, expanding to 20 by year-end.
The content rights groups are getting angry, and according to their own figures they probably should be. But when the going gets tough, the tough might decide to become invisible. The very cheeky and naughty people at Jamabalaya Brands offer invisibility for $9.97. CryptoStick's 100MB of storage isn't that much, but they claim it can do a lot of weird and wonderful things, and they are working on an AES256 version. The real problems arise when we start thinking about the possibility of much larger capacity storage devices with this kind of functionality embedded. One of my highly valued readers just dubbed this concept the "CryptoPod." Sounds like a sneakernet on steroids to me.
If you're tired of the turgid Q4 results releases and in need of bulking up your information diet, check out the presentations from the FTTH Council Europe's conference a few weeks back. Don't click on "Conference Presentations" (the tag contains a spelling error), but look for speakers whose names are underlined, and that will take you their individual presentations.
Belgacom, a company I don't actively cover, has released results, which include an update on its fiber-to-the-cabinet and VDSL project known as Broadway. To date, the company has invested EUR83m and installed 1,343 remote D-SLAMs, equating to 264k lines, or nearly 7% of its PSTN footprint.
Satellite behemoth SES-Global has issued a press release on the state of German TV in 2004, quizzically only in German, though the IR department has emailed a translation. I have reproduced it below. Interestingly, only 1.4m households still receive terrestrial TV, and nearly half of those are on DTT. Also of note is the virtual halt of digital cable subscription growth last year, in favor of satellite, which grew 65% last year. Also of potential interest is this paper detailing some of the fairly radical steps taken to promote digital switchover.
ASTRA Penetration in Germany
- In 2004 the number of satellite TV households in Germany increased by1 million to 15.47 million (+ 7%)
- 43% of all TV households in Germany rely on DTH satellite
- The number of cable households in Germany decreased by 3.9% to 19.35 million households
- Only 1.37 million households (-15.5%) out of 36.18 million TVhouseholds in Germany continue to receive terrestrial TV
- The overall ASTRA penetration in 2004 increased by 920.000 households to 15.2 million
- Including cable redistribution ASTRA reaches 34.55 million households in Germany
- The number of digital satellite households in Germany increased by1.78 million (+64.9%) to 4.51 million
- 63.4% of all digital TV households in Germany receive via satellite (+5%)
- ASTRA’s digital penetration increased by 1.76 million to 4.47 million(= 99% of all digital satellite TV households in Germany)
- Germany currently counts 1.98 million digital cable households
- The number of terrestrial digital homes is 0.62 million
Thursday, February 24, 2005
Just a few minutes ago, I got an email with the title "Your blog could cost you your job." Needless to say, I sat up and took notice. It turns out to be a link to this article, which paints a dystopian picture of the institutional blog. However, there is more positive news out there, if you look. Late last year I paid a visit to Euan Semple in the BBC DigiLab, and he has graciously allowed me to interview him about the very forward-looking way in which "Auntie" is taking the new on board and putting it to meaningful use.
Q: On my recent visit to your offices I was really impressed with the demonstration you gave me and the extent to which it appeared the BBC had enthusiastically harnessed wikis, blogs, forums and social networking elements internally. For those who weren't there to see for themselves, can you outline some of the key developments for us?
Because we had our own technical infrastructure in DigiLab, a group I run who talent spot new technologies, it was relatively easy for us to take a suck it and see approach to tools to aid networking in the business.
The first thing we did was to put in a bulletin board. We started using it amongst a group of us to begin with and gradually started telling more people about it. Word soon spread and amazingly it is now the BBC's second most visited internal site with staff using it daily to ask questions and get answers. It gets used for lots of practical stuff which when you add up all the quick solutions and problems avoided is saving the BBC loads of time and effort. Ask on pretty much any topic and you'll get an answer within half an hour.
The second tool we put in is a social networking tool that lets users set up a page of info about themselves and can then be searched for particular skills or interests. It also allows users to establish interest groups which are becoming a really effective way of identifying and supporting various communities within the BBC. We are in the process of combining the bulletin board and the networking tool and once we have that I think things will really take off.
We then put in a blog server and now have around 70 blogs being written by about 100 people. They are being used for a variety of tasks from group blogs for project teams to operational logs to pass on info between engineering shifts to personal blogs capturing individual learning and experiences.
Lastly we have implemented a wiki. We chose a tool that allows us to manage access a bit. I know the principle of wikis is to be totally open but that is not always possible or approriate in current corporate culture and we have to acnowledge this and work with it. The people most attracted to using wikis are those involved in writing formal documents, policy, manuals etc.
Q: I know that there are many working within the BBC who are not tied to a PC or particular worksite, but adjusting for that part of the organization, what is your best guess on the level of buy-in or participation from the "addressable" audience? Is this on the increase, has it reached a steady state, or is it in decline, in your view?
Say we have approximately 25,000 staff and of those maybe a third are away from their computers a lot of the time, working on location or in studios etc. Of those who are left we have 8,000 or so connected to our bulletin board in any one month with approx 500,000 page impressions. So we are getting to 30% to 40% of the available population.
Q: I'm also curious to hear your thoughts on the generational aspects of this phenomenon. You mentioned that younger, more tech-savvy employees just naturally expect to have access to things like wikis. Are they the driving force which others follow, or are older, perhaps less geeky employees also driving demand and usage of these tools? In other words, is this something which takes a bit of selling and peer pressure to spread, or are the potential benefits compelling enough to drive adoption organically once the tools are introduced?
It is generally the more web savvy youngsters who are taking up the tools but we have recently had a very senior manager start an internal weblog so more and more people are up for it. I also find that people who are old enough to have teenage kids also "get it" as they watch their kids communicating with their friends and are possibly slightly jealous!
Q: What is your reading/experience of the tangible and intangible benefits
of all this to the organization overall? Then, reversing that and playing devil's advocate, how does an organization like the BBC ensure that these tools don't somehow turn into a distraction, or lead to fragmentation or factionalization of the workforce? Do you have any sense that people suffer fatigue with these tools over time, or that they reach a level beyond which they see diminishing returns?
The benefits are that we all get access to the accumulated experience and knowledge of 25,000 staff. Work related questions get sorted in minutes on the bulletin board and people are able to identify the right people to call on for help from the blogs and skills database. Getting 6000 or so questions answered in a month, even if they were minor ones, which many are not, adds up to a significant saving.
As to time wasting there is a perception, mostly amongst those who are unfamiliar with them, that these tools can encourage people to waste time. However, as has been discussed on our boards recently, people are more and more comfortable with multi-tasking and alt-tab between the board and other tasks they are doing on their computers. If they are "wasting time" then this should be picked up by their managers and be dealt with as they would having too many coffee breaks or staring out the window all day. We need to be able to treat people as grown-ups and expect them to manage their own time effectively.
Q: What other developments would you like to introduce into the mix, and what benefits would you envisage?
Integrating what we have more is the next step. Making it easy for groups to form, build a personalised suite of tools and start putting them to work. I think having a range of tools available and, so long as you aren't spending too much money on them,. seeing which work and which don 't is the only way to do this. Some tools that work for one group may not work for others and departments change over time in their readiness to adopt this stuff.
Getting a good RSS aggregator is going to become more important as the volume of activity increases. It is important to get what is being written seen by the right people to give contributors the oxygen that makes it worth continuing. There is a challenge in businesses getting to the critical mass that is necessary for these things to work and that is so much easier on the internet, but we have made a very good start.
UK multi-utility and domestic services company Centrica reported results today, and there's an interesting fact that came out in the conference call, according to my boss, who is an oil and gas analyst. Centrica's main business is residential gas, and they lost an awful lot of customers last year (over a million). However, they've also got 1.4m pre-select telephony customers, which makes them a significant player in voice. On the conference call, management apparently alluded to a customer win-back strategy whereby customers who fit the desired profile are offered free evening and weekend calls for coming back to Centrica. Average annual household expenditure on gas in the UK is £340, but I am told that Centrica probably has to pay something like £125 of that gross figure to the network owner Transco. So maybe a net figure might be £215. BT's latest reported annualized revenue per household (net of outpayments to mobile operators) was £259. These numbers probably aren't strictly comparable, but we could argue that Centrica gives away the "more valuable" commodity service to retain control of its dominance in the "less valuable". What does BT give away?
Not long ago, someone in the UK terrestrial broadcasting field told me that TV and the internet are two separate things. One resides in the living room, the other lives in the bedroom or study. Last night, I was only partly watching CNBC on the sofa (I miss Jim Cramer's unintelligible whine), while searching on my wirelessly-connected laptop (true enough, the Linksys lives in the bedroom, but the internet lives wherever I am in the house) for Beverly Hillibillies torrents (it was research - I didn't download any). Clearly I'm not alone in no longer seeing strict boundaries, and apparently NetImperative readers don't see such a bifurcation either.
A very highly valued reader and Skype-watcher has been tracking traffic figures intermittently (which I should have been doing all along - why don't I have a warehouse full of number-crunching slaves like I hear they have in the Bulge Bracket?), and has observed that average minutes of use per day on Skype appear to have trended above the 40m per day mark. My tally overnight confirms this, at 40.2m minutes. Staying in Eurocentric mode, let's look at this in the context of some recently-released market stats from France, one of the few markets in Europe where the regulator produces consistent and useful quarterly market data.
At 40m minutes per day, for what it's worth, Skype is currently generating a level of traffic comparable to 15% of the daily fixed line traffic for the entire French market in Q3 2004. Another way of looking at it is that Skype traffic is nearly equal to the combined outgoing fixed line minutes to mobile and international numbers from the French PSTN.
Based on these same stats, I work out that French fixed line channels (33.6m) and mobile users (42.3m) generated just under 13 minutes per day of combined outgoing voice traffic in Q3 (7.9 per day for fixed, 4.8 for mobile). Just how many Skype users there are in a given day, we don't know, but currently I see 1.7m users logged on. If we were to take a stab at an actual daily user figure of three times that level (this is based on a crude segmentation of a 24-hour day into the three big broadband population centers), it implies that the average Skype user generates 7.9 minutes per day of voice traffic - in other words, a level comparable to that of the average French PSTN user.
We can debate, and many are already, whether this usage is substitutional, incremental, or something else altogether. I suspect it is all three to some extent, but I don't know. Hell, what do you want for free?
Inspired by an article in yesterday's Financial Times (registration required, etc., I'm not even going to bother posting a link), I had a look in Warner Music's S-4 filing with the SEC. A notable quote is:
"...as networks and phone handsets become more sophisticated, our music is
increasingly becoming available on mobile platforms through wireless service
providers via ring tones, ringback tones and music video downloads... We believe
the wireless market offers a more secure environment than does the internet,
with built-in digital rights management features operating inside privately
controlled networks, and thereby reduces our exposure to piracy."
They’re not alone in their bullishness – Universal Mobile is quoted in the same FT article projecting that the market will grow in value to €10 – 12bn by 2008 – 10.
Where I am having a bit of trouble is in the “privately controlled networks” assumption. For the physical networks themselves, yes, but human networks are formed by people with devices, and people tend to do strange and unorthodox things. Where, for example, is the operator control in transactions like Bluejacking, or its offshoot? And aren’t things only going to get more complicated with more onboard storage and Wi-Fi (and others) in the mix?
Assuming that the new consumer handsets incorporate some form of zero-conf (interestingly, the N900iL pictured above has a Linux OS and supports instant messaging and presence for up to 240 persons in a corporate WLAN environment, albeit via a server), I can see these ingredients setting the stage for a proliferation of applications along the lines of Pocketster. Maybe the labels will be able to insinuate themselves into this scenario and monetize it somehow – they are making moves in this direction in the wired world, and there are other options available with a more extensive social aspect. Simultaneously, some of them are clutching sticks as well as carrots.
As usual, the carriers are caught out on a limb in this scenario. Last week’s announcement from Nokia and Microsoft seemed like a pretty clear two-finger salute (note to non-British readers – this is a rude gesture, do not use it when on holiday here, unless Fight Club is your favorite film) to the carriers for getting carried away with their own perceived importance in the value chain (as was Motorola/Skype, and an earlier Nokia announcement on Python, in my view). Add in handset-to-handset connectivity, with no audit trail, and a business model based on the £1.50 download starts to look pretty ropey.
Perhaps the better term would be "Skype-osphere" - the evolving universe of equipment and applications developers building on interesting ways to extend Skype usability. Case in point -the UK's Connectotel today launches a public beta of Skype-to-SMS. They were kind enough to make me part of the closed trial, and it worked like a charm. Particularly for the youth segment, this fits in a very sweet spot between two highly addictive behaviors, SMS and IM, and will also save them money.
SMS isn't chump change for the operators, either. In Q3 last year, UK cellular users sent 6.3bn SMS/MMS (I'm sure most of this was SMS, and the figure doesn't actually include Virgin Mobile), and SMS/MMS operator revenues were GBP508m, or 17% of total turnover. I calculate that in Q3, UK cellular subs sent 1.2 SMS/MMS per day on average.
Just last week we saw the launch of XConnect slightly ahead of schedule, and perhaps this is why - a rival has appeared in the form of e164.info. The founder is Thilo Salmon of sipgate in Germany, and SIPphone is on board too. One thing I can't understand is that Musimi.dk is listed as a member, though it was acquired last year by Telio, a founder member of XConnect. For such a young industry the politics seem to be getting increasingly complicated...
Cablecom has reported Q4 results today, and ended 2004 with 103k VoIP subscribers, adding 30k in the quarter. That may not sound like much, but it's 42% sequential growth, versus only 9% for broadband connections, and penetration of the broadband customer base now stands at 38%, only six months after the full product launch. It's also important to remember that Switzerland is a small market - incumbent Swisscom has only 3.95m voice lines, and that suggests that Cablecom has captured c.2.5% of the market. Depending on how broadband connections trend (the company has 1.6m CATV subs, digital penetration is only 7%, and broadband subs total 269k, or 17% of the total base), 10% market share is probably within reasonable reach.
Wednesday, February 23, 2005
I'm sure this has been given coverage somewhere else before, but a friend sent it to me today. It sort of reminds me of the variations on perpetual motion which were popular gifts in the 70s and 80s (usually for that man whose taste baffled everyone who knew him). Except that this is musical, and each experience should be unique, because the user sets each of the variables in motion. It's not strictly telco-related, but then again, it begs the question of whether telcos are wide of the mark in expecting to make money/retain customers by reproducing familiar experiences like television, when consumer interest may actually gravitate around something new.
Well it looks like the long march towards a fully-functioning Peerio deployment is here. Later today the company will announce the final piece of the puzzle, a tie-up with VoIP service provider Ewoophone. This means that real customers will be using Peerio softphones and/or hardware with Peerio middleware to call each other, the PSTN, and presumably any other VoIP users, as Ewoophone will support Peerio GNUP. If you happen to be an Ewoophone user, I would love to get a call (let's try Peerio to Skype), though my Chinese is exceptionally bu hao.
I have a number of very cool readers who send me things, and they are increasingly the lifeblood of this humble bloglet. I think this may have received some coverage elsewhere, though I haven't come across anything in English. Norwegian CRM specialist HansaWorld have incorporated Skype into their suite of call center tools. This article says that the Hansa folks found the integration to be really smooth, though they note that SkypeOut quality is highly variable. HansaWorld claims 64k SME customers worldwide.
And they're by no means the only ones doing it, though some of the other "implementations" are not so high-tech. Check out this site, a directory of language schools. At the bottom of the orange column entitled "EDITO" you should see "Call us free of charge using skype.com. We are here to help."
UPDATE: I subsequently went into my Skype client and searched for users under the word "language" and turned up no fewer than nine user names which appear to be language schools or services businesses. Curiosity piqued, I then searched for "pizza" and turned up a few of what appear to be real-world pizzerias, including one claiming to be a Dominos in Australia. There are also a helluva lot of entries under "hotel" which appear to actually be hotels, as there are for the word "restaurant". Then again, the word "viagra" also turns up some very interesting things...
UPDATE 2: Searching for "IBM" in my Skype client just now, I come up with a lot of spurious or suspicious results, but there is also a fair number of users with normal name and "IBM" in brackets afterward, as though it is a formal affiliation.
UPDATE 3: I have also found someone claiming to be Bill Gates, and five Paris Hiltons.
Today's Financial Times contains an IT supplement section (which they want you to pay for online - or sign up for a 15-day trial), and in this is an interesting survey of corporate telecom procurement managers from the UK, Germany, France, Benelux, Spain and Italy. The grapic is very generously offered free by the FT here. Note the apparent indifference (nearly 50%) to multi-modal (GPRS, 3G and Wi-Fi) offerings from a single provider. Of more interest is the graphic at far right, which focuses specifically on laptop users. The bias here is still overwhelmingly toward cellular, but Wi-Fi puts in a respectable showing, with more than 5% responding that their plans are mostly Wi-Fi-related, and nearly 15% saying that they are going for an even mix of Wi-Fi and cellular. I hope that O2, which commissioned the survey will continue to update it, because it would be interesting to see how the responses trend over time.
Tuesday, February 22, 2005
Popular Telephony had another press release concealed in its ma gua, as it turns out. In one go, they are announcing the establishment of a representative office in China, a partnership with PCB-to-office-to-POS-and-more equipment specialist Grandi, and also with gateway specialist Ejoin. The Grandi GIP2000 device in particular is an interesting one, combining PSTN, two Ethernet ports and a SIM card slot. Is this the first step to an off-the-shelf solution for business which you can buy at your local WalMart, as envisaged in this Telepocalyptic interview with founder Dmitry Goroshevsky?
My cyber-buddy Stephen Griffiths at Breakthroo has published an interesting report on the coming barroom brawl between broadcast and broadband. It was Steve who introduced me to Torrentocracy when it was only new, and for that I am eternally grateful. It turns out that we were each working on long pieces about the future of television independently, though I'm able to point to his because it's not trapped inside a password-protected database (but what's a poor boy to do?). His report also contains some of those cool war room battlefield map-type industry diagrams that I am advised I should be using. Many of our conclusions and observations seem to match up nicely. Enjoy.
One thing I have discovered in my first year of blogging is that the process opens up doors to all kinds of contacts that I never would have had previously, and many of these contacts come from within industry. All of them have something interesting to say, but for political or strategic reasons, might not necessarily want to be seen to say it in a public forum.
In talking with one new contact, Thomas Anglero of Telenor, we hit upon an idea which creates a forum for an open and meaningful discussion to take place on a first-name only basis. Let's call it "First Name, First Tuesday," just as a working title. This would involve setting up a Skype conference call which could be captured using the method described by Stuart Henshall, and then syndicated as a podcast using Gary Lerhaupt's Prodigem or some other hosting service.
This post is intended to elicit feedback on the idea itself, and to assess likely levels of interest in participating. A lot of work still needs to be done to put this together, but we wanted to float the idea up front. Ping me or Thomas with your thoughts.
Freenet has reported full-year results today, and buried in the release is an actual number relating to the VoIP product, which the company launched last year at CeBIT. Freenet claims that 300k of its total 350k DSL users (that's 86%) have downloaded the software. That's stopping short of giving an active user number, but with on-net calls being free, and 100 free minutes to the fixed network bundled in for no monthly fee, I would assume a high proportion of these downloads correspond to some degree of activity.
Popular Telephony has frequently been accused of promising much and delivering little which is visible, at least outside its partner community. That may well be about to change, and I think we can expect a flurry of announcements in coming days, and hopefully some better visibility about what lies ahead. It is my understanding that the company is trying to cut the lead time between announcements and delivery, as well as to release one new application every month. Today PT is to make the first new announcement in some months, a partnership with Commoca to embed Peerio on Commoca terminals based on Texas Instruments' TNETV1050 platform. This seems to partially validate PT's focus on silicon, as the relationship with TI probably went a long way to opening the door for this deal, and may mark an expanded presence in the US market. Watch for more PT news in coming days.
Monday, February 21, 2005
One of the issues I droned on about in my 133-pager on Sky was that P2P, BitTorrent to be precise, was a wild card which should not be underestimated. This item from Boost Marketing, seems to underline these concerns. If the data cited is correct, then the UK is the most intensive user of BitTorrent for getting just the kind of content that Sky bases its Sky One proposition around, but up to one year earlier. Another good example of how the arcane legacy licensing system is made a nonsense by IP. More on this study is to be found here.
As a purely personal aside, I downloaded and played around with Azureas over the weekend, and I have to say that it is much easier to use than any set-top box or PVR, which may account for why it has been downloaded 36m times.
I was enjoying some time outside the blogosphere Friday, when XConnect went live, though I crop up in the press release... This has been some time in coming, but it looks interesting, and I'll be very curious as to what the members do in the way of tariff offerings around it, and who else signs up.
Waking up as the CEO of a Dutch communications company must be something akin to the film Groundhog Day - you're not quite sure how things are going to go badly, but you are sure that they will, and that you'll wake up to face the same prospects tomorrow. Today's Het Financieele Dagblad carries an interview with the CEO of MSO Casema (they want you to register and pay for this article, by the way), in which he seems to concede that the company can't be a viable long-term player on its own. His stated preference is to be acquired by a telco, and the three he identifies are KPN (which used to own Casema before being forced to dispose of it in the late 90s), as a faster route to FTTH, Belgacom and BT. He also muses on the possibilities for teaming up with a mobile player, and of national MSO consolidation in the Netherlands.
Late last year, I posted on an impending market splash from VONOS. Now all the various associated URLs are for sale, suggesting the company, despite having some strong technology partners, was ultimately unable to get funding. Whether this was to do with the specifics of the business plan, or some other factor, such as lower levels of investor enthusiasm for VoIP generally, we can only speculate.
Wednesday, February 16, 2005
A UK ISP mailing list which I discreetly lurk on has seen a few postings suggesting that last weekend's meltdown in BT's DSL platform actually extended well beyond the 70k users reported. One member comments that customers as far afield as East Anglia and Bath were also affected. More as and when it becomes available.
A clever and funny friend wrote not so long ago that listening to telecom executives extolling the virtues of IP was like watching a naked man hug a porcupine. That may not be limited to telecom, by any means. Yesterday, I finally finished and published a masochistic 133-page note on BSkyB, and for anyone who may have stayed awake past page two, my recurring theme was that the company is hampered long term by a lack of broadband connectivity. It's service is mainly push, with limited pull or push-back, and this is out of step with trends elsewhere, or so I argued. So you can imagine my interest in seeing this story on the front page of today's Financial Times. Frankly, I find the admission of one News Corp. insider in the article (“Ever since the bubble there has not been very much conversation about the internet round here, but now attention is on it again.”) somewhat shocking in early 2005.
Tuesday, February 15, 2005
Monday, February 14, 2005
Not to be out-Skyped, Xten has hit the big time now, teaming up with Lucent. This pair of announcements today begs some interesting questions, with Motorola backing Skype, and Lucent coming down firmly in the standards camp (IMS and SIP).
Have the latest Skype download stats got you down? Worried that telco is caught in a deflationary death spiral? Cheer up and join the fun!
UPDATE: A valiant Dutch reader later wrote in to say that he took the dreaded BT aptitude quiz and got 10 correct answers out of a possible 9. (I have graphic evidence to support that this in fact was the result.) His observation - BT indeed needs help.
I just got a press release from UTStarcom saying that Swedish WiSP Atenit has chosen their MovingMedia 6000 product for coverage of 12 municipalities in the Kalmar region of Sweden. That's great news, and I'm happy for them, but this deal was actually announced in December. MovingMedia is UMTS-TDD as pioneered by IPWireless, who receive top-billing in the original press release.
Well, the Valentine's Day yacht-party accompanying the Skype/i-mate announcement hasn't even left the dock, but Motorola has today also answered Niklas Zennstrom's love-call. The press release isn't on either site yet, but the alliance focuses on "co-marketing of new optimized Motorola 'Skype Ready' companion products, such as Bluetooth headsets, dongles, and speakerphones, as well as delivery of the Skype Internet Telephony experience on select Motorola mobile devices." The latter is presented as though it's an afterthought, though I guess the carrier politics around this are highly complex, to say the least.
Despite the tiptoeing, it would seem all too clear that Motorola has cast a vote about where it sees the market going long-term, and wants to be in sooner rather than later. I imagine the carriers are hopping mad. You can also hear the back-of-envelope scribbling of investors and analysts, bringing forward their "death of voice" time horizon. As someone whose livelihood depends to great extent on the continued existence of incumbents, I should be more positive at all the buybacks, dividends and cash flow improvements we are witnessing. However, on anything more than a 12-month view, I find it increasingly difficult to justify putting money in the sector.
Let's be straight, we all knew this day was going to come, but my honest expectation before the i-mate deal of last week was that it might take another year to break down the major handset makers. What's surprising about this is not that it is happening, but that it's happening when Skype is not even 18-months old. In practice, until data tariffs around Europe fall, this is probably only another marginal source of anxiety for the incumbent mobile players. God help them when we find ourselves in a flat-rate data environment like Japan, or if a truly disruptive MVNO enters the picture, along the lines of Earthlink/SK. Sing along with me...
Eventually the entire industry will speak in acronyms with a few articles and verbs thrown in at random. Seriously though, Kudelski unit Nagravision is today to announce a solution in Cannes, produced in conjunction with Gemplus and Thales, which will allow SIM authentication and billing for conditional access broadcast services over DVB-H handsets. This probably won't be an issue in the UK for some time , given capacity issues on DTT, but in markets like Italy, where MHP is already running via a prepaid card solution, this could really be an interesting development. Longer term, as functionality and storage increase, it will be interesting to see what sort of peripherals develop to make the humble mobile phone a more useful and integrated part of the elusive "digital home," as we've seen develop around the iPod phenomenon.
Thursday, February 10, 2005
It's that time of year again, when companies begin to bombard us with facts, figures, and spin. Today we had BT Group and France Telecom reporting, with very little time in between, which is unwelcome news to a one-man show like myself. Anyway, here are some interesting tidbits I picked up on from the four hours of presentations I endured.
BT Group - 813k net DSL additions in Q4 at the wholesale level (that's nearly double the comparable quarter last year), but the retail share of net adds fell to 26%, which Retail's CEO described as "disappointing." Retail's New Wave revenues were up 38%YoY in the quarter, but were still GBP86m short of compensating for the loss of traditional revenues, and this shortfall has grown over the past three quarters. Ben Verwaayan said the Bluephone trials underway were proving satisfactory in terms of voice quality, coverage and handoff to GSM, and the soft-launch is on track for Spring. Retail seems to not feel it's in a position to launch video until end of 2005, or early 2006, and stressed that other people do linear TV better already in the UK market, so why try to replicate it? I still take this to mean Freeview in the STB, but I'm also intrigued by the fact that BT is on 2wire's customer list, which makes me wonder if there is something happening for BT on the alternative free satellite front with the BBC, which "Auntie" seems quite keen to move on.
UPDATE: An astute reader points out that 2wire was first mentioned in the broadband strategy presentation back in March 2004, in relation to the home gateway. However, in this interview by Ted Shelton, 2wire's CEO says that the company is pitching satellite deals for all its partners. I'm more curious than ever now.
France Telecom - A lot of talk here too about new platforms and services, but FT is somewhat further down the track. To the end of December, Wanadoo had rented 234k Freebox units, averaging 26k per week, and sold 35k MaLigne subscriptions in December alone, taking the total to 75k. Whether there is any connection or not is unclear, but it is noteworthy that Wanadoo's share of net additions in DSL in the quarter rose again, to 41.6%, the second consecutive improvement. Another thing about FT's results which surprised me was a sequential increase in PSTN lines (100k), and a deceleration in the rate of decline in consumer voice volumes over Q3's poor performance.
More fun and games in the days ahead, with TeliaSonera tomorrow, same bear time, same bear channel...
Wednesday, February 09, 2005
The UK Office of the Telecommunications Adjudicator yesterday issued an update on unbundling progress to the end of January. Against a previous target of 50k lines by the end of January, the industry only managed 31,300, which means a net increase of only around 11k since the end of September. The report notes improvements in BT's delivery, and a commitment by BT to achieve 98% delivery of lines on agreed timetables by the end of March. It certainly looks a long road to the anticipated 2.5m lines by end-2006.
Tuesday, February 08, 2005
I don't really have time to be blogging today, but this deserves special mention. One of the real pitfalls of investor relations is the outsourcing of conference calls to third parties, and my experience is that you usually get what you pay for. Fastweb's Q4 results today are a case on point. This morning an email invitation was sent out to analysts to join the conference call, which it turns out is being hosted by Deutsche Bank, with the caveat:
"This email is not intended to be addressed to US persons (as that term is defined in Regulation S of the U.S. Securities Act of 1933) or Japanese, Canadian and Australian persons or to persons present or resident in any of these countries. To the extent you are a US, Japanese, Canadian or Australian person, or a person present or resident in any of these countries, you have received this email in error and should therefore delete it.
FASTWEB (Milan, Nuovo Mercato: FWB) announced today its results for 4Q and FY 2004. Please find attached the related press release and presentation.
A conference call will be held at 15.30 (CET) / 14.30 (UK BST)/ 09.30 (EST).
To participate in the conference call, please dial the following numbers at 15.25 CET) and ask to be connected to the FASTWEB's conference call:
Europe: +44 (0) 1452 560 297
US (QIBS Only): +1 866 224 3297"
Pretty standard stuff on the whole, except for the mysterious term "QIBS" at end, as it relates to US investors. I presume this stands for Qualified Investment Banking Somethingorother, but the call center staff sure didn't know. After being put on hold, they returned to say that they had to ask me if I was a qualified banker. "Qualified on what criteria?" I asked. They didn't know. So there was nothing for it but to give up. Perhaps it was because of my American accent, or indeed my existence as an "American person," even though I am based in London. Very poor indeed.
UPDATE: A couple of kind readers chime in to confirm that the acronym QIB stands for "qualified institutional buyer," so clearly this is linked to Fastweb's capital increase. However, why this should have any bearing on simply listening to a quarterly results call is still beyond me.
Monday, February 07, 2005
A bit of feedback is starting to come in. Apparently, we can add the Peace Corps to the list, which doesn't surprise me. I am also told (unconfirmed) that European employees of a prominent global internet player, which has so far partnered with incumbent telcos prominently, are also avid users...
A couple of updates via a valued Dutch reader. According to this article, Dutch MSO Casema (backed by Carlyle) is responding to housing association FTTH deployments in an area of new build in the Vathorst district of Amersfoort by laying its own fiber. However, managing the collateral damage looks challenging. Casema's fiber triple play packages (internet, standard television and radio channels, and telephony) are priced at EUR44.95 for 3Mbps, EUR64.95 6Mbps, and EUR84.95 for 15Mbps, while the 10Mbps symmetrical fiber service from Portaal costs EUR50. That's the access story. On the content side, broadband bad boys Versatel are in this Financieel Dagblad article talking about a la carte programming offerings on their platform.
A valued reader in Norway points me towards a couple of recent things of note. First, Q3 2004 official stats show that the core of the broadband market resides in the 512 - 704kbps range, though connections over 1Mbps are now 25% of the total market and growing rapidly. Secondly, this article puts the total number of commercial VoIP users in Norway at 60k (in other words around 12% of broadband users), of which Telio, the little telco that could, has 36,000. Telenor's entry to the market is reported in the article to be March, but the company has said April.
I don't have any figures to back this up, but I would naturally assume that a lot of Skype use, as is the case with IM generally, must occur at work, clandestinely and with no official sanction. However, I think it would be fascinating to track how much is occurring with full knowledge and support of companies. Please send me any anecdotes you might have to this effect, and I'll duly give credit where credit is due. Here's my first, anyway. It has come to my attention that project teams at Accenture, coordinating on work between Madrid and several locations in Pakistan, are choosing Skype over GSM where possible, for obvious cost reasons, but also because of the superior codec. Management are apparently aware and approve, but there is no official Skype policy yet.
If anyone was under the impression that telcos are feeling more comfortable with their situations, then they need look no further than two pieces on the newswires to measure the true extent of the underlying anxiety regarding just maintaining customers, let alone generating growth.
Les Echos is reporting this morning that, having only just won the right to raise monthly PSTN subscriptions, France Telecom is pursuing plans to launch naked DSL. In the few European markets where it exists right now (Norway, Denmark) it has been the product of either direct regulatory mandate or the existing commercial codes, rather than as a strategic development. If we ever needed graphic evidence of the pain caused by having 25% of DSL lines in the hands of the unbundlers, this is it, and other markets are heading the same way over time (BT's press release from last Thursday throws in a reference to 1m unbundled lines in the UK by December '05).
Meanwhile, Skype has inked its first carrier deal, with Hutchison Global Communications in Hong Kong. As we've written about in the past in relation to City Telecom, the Hong Kong market is one where 10Mbps symmetrical service might set you back EUR16 a month on a bad day. With European broadband in quasi-meltdown mode in markets like France, the Netherlands and the UK, I wonder how long before we see Skype carrier deals in Europe as well.
Saturday, February 05, 2005
I don't know how long this has been going on, but my guess is probably not long. Yesterday, trawling around the BT site, I discovered that they are now using RSS feeds for news and financial releases. Love 'em, or otherwise, this is a great thing for companies to be doing generally, and they're the first I've seen doing it, and it doesn't surprise me that BT appears to be first. If you're aware of any others, please ping me.
Last Wednesday, at the Sky quarterly analyst briefing, James Murdoch was asked if developments like the just announced NBCUniversal/CinemaNow deal concerned him (incidentally, CinemaNow's licensing deals allow it to offer full service to UK users, though I don't know how widely that is known). His response was that at present UK DSL is not up to the challenge of providing the 6 - 10Mbps it would take to deliver a competitive video offering. UK Online's new 8Mbps service (4.4m household footprint) notwithstanding, we would have been inclined to agree with him, at that point.
On Thursday, an almost-audible Homer Simpson-esque "doh" was in the air, as BT Group, in deciding that it wasn't ready to enter the OK Corral afterall, issued a statement of regulatory compromise to OFCOM, and simultaneously revealed its plans for commercial ADSL 2+ products by autumn. These two announcements mean that we can expect a more credible push in video both by BT itself and the unbundlers (I have heard unconfirmed reports that Bulldog has hired some veterans from Fastweb, which begs interesting questions).
Then again, maybe more bandwidth just means that users are freer and happier to do their own thing, whether that's CinemaNow, Cybertelly, or something else. Miss that last episode of 24? Don't worry, it's all here, and you don't need a PVR or a subscription. Maybe you prefer The Simpsons, Deadwood, or Stargate SG-1? No one ever said it was legal, or nice, but it's out there and it ain't hard to find, if you can drag yourself away from the TV.
Thursday, February 03, 2005
In Sky's quarterly briefing yesterday, James Murdoch made the interesting comment that the Sky+ PVR product accounted for 13% of group net subscriber additions, up from 8% last year. I think he was trying to make a case for the PVR as a magnet for incremental customer growth, rather than just a churn mitigation tool, and this is indeed positive news. The flipside is that 85% of adds to the PVR product were upgrades, and with 52% of group subs on top-tier packages, and just under another quarter taking between one and three premium channels, we would assume that a large proportion of Sky+ subs are not actually paying the GBP10 monthly subscription (the service is a free bolt-on for existing subscribers taking at least two premium channels). Still it's interesting to see a properly-promoted new product succeed in generating some growth, and it's going to be interesting to see how things trend by year-end, when the UK cablecos have launched this, which has three tuners and claims to forward-compatible with HDTV. Meanwhile, sweet-looking portable products like this are going in the UK market for only GBP200.
Wednesday, February 02, 2005
This press release caught my eye yesterday. What I know about coding in Python you could write on the head of a pin, but someone I had some correspondence with out in Oz last year was working on some interesting-sounding SIP applications written in it. I seem to recall him saying that the voicemail box function he wrote required very few lines of code. If anyone out there has any further ideas or insight to share, do feel free to contact me. I'm wondering if there's any case for viewing this as a backdoor to independently-developed VoIP applications making their way onto Symbian-based 3G phones, without carrier "buy-in," or even awareness?
UPDATE: Trawling through the BitTorrent download data on SourceForge (and incidentally, it did go down in January, as far as I can see), it occurred to me that this is another common place where we find Python used. Most of the really popular clients, including the original application itself, were written in Python. Got an hour to kill on your commute home? Set up an ad hoc swarm with the people on your bus. You can't do it now, but I'd be surprised if it weren't possible within a couple of years.
Tonight I got out the Ouija Board for the first time in some while, and asked "Which little-known upstart is working on some stuff which will give telco analysts everywhere a good old dose of future shock?" The answer didn't surprise me, though it took a long time to spell.
Tuesday, February 01, 2005
I've been buried in some other projects, and consequently not watching VoIP things like I should. However, Keith at VoIPNUKE has been awake and counting Skype downloads. He's on Mountain Time I believe, so judging from the time stamp on his post, there were 55,339,228 downloads at 2:08 AM my time today, or so it seems, and he reckons that Skype saw 339k downloads in the previous 30 hours. Looking now, eight hours later, the total is 56,404,006, which suggests an incredible 133k downloads per hour, or 2200 per minute. Can this be right? Maybe it's got something to do with the launch of 1.0 for Mac and Linux today. Add to my personal wishlist a time series of download history (either Excel format or graphic) from the Skype servers at some point.
Separately, my humble blog has reached the 100 subscriber point, according to my Bloglines newsreader. Thank you all for your ongoing interest and helpful input. I intend to post somewhat less sporadically within about a week, once my outbox has been cleared.