Thursday, June 29, 2006

Nice broadband if you can get it...

The late, great Charlie Parker reportedly once uttered, "Civilization's a great idea - too bad no one's ever tried it." I guess the same could be said of customer care. It shouldn't be surprising that the success of "free broadband" offerings should end up a curse for the carriers promoting them, but evidence seems to be mounting of CRM systems really groaning under the strain. While I was on holiday, Keith McMahon gave us a first-hand view of his early misery with TalkTalk (and he's by no means the only one), and today I heard a stunning tale of ineptitude from a Japanese colleague. She's been a Vodafone subscriber for years, but as her contract expiration approached she clocked the Orange free broadband offer and decided to go for it. As an existing Wanadoo (now Orange) broadband customer, she expected it to be a straightforward process. As the old song goes, "That's when your heartaches begin..."

She went to the local Orange shop near our offices just before lunchtime yesterday, signed up for a mobile contract and chose a handset. Next the clerk in the Orange shop attempted to contact Wanadoo to make the required adjustments to the account so she could take advantage of the free broadband offer and get herself a LiveBox. Normally, my colleague would have just called Orange directly, but as her Vodafone number won't be ported over to Orange for a few days, the shop clerk made the call - easy enough, right? Wrong. After numerous failed attempts with long hold times on various numbers, the clerk recommended that my colleague return to the office. They would sort everything out there and call her when the arrangements had been made. Four hours later she got a call from Orange saying that Wanadoo customer care was claiming that it needed to speak to her about her account. Unable to get back to the Orange shop yesterday, she returned about 10:00 AM today.

Once again the Orange shop staff today had trouble getting through to Wanadoo, and when they finally did, the Wanadoo people checked her home phone number and could find no evidence that she had a broadband account, despite her repeated assertion that in fact this was the case. They then asked the Orange people to phone another number to run more checks and at this point my colleague was told that she needed to contact BT to confirm the status of the line. After 90 minutes in the shop she was urged to return to the office and let the Orange people resolve the issue. A couple of hours later they called to say that everything was settled and she would receive her LiveBox in anything from 10 to 28 days.

So much for seamless CRM. I can only assume that, taking into account the handset and gateway subsidies and all the added burden on the Orange and Wanadoo store and call center staff this GBP30 ARPU per month customer is already bordering on the "never profitable" category. Not to mention the three hours of her time spent trying to be recognized as an existing broadband customer. It's episodes like this which make me cling firmly to my boring, overpriced NTL cable broadband service. It's never let me down once, and the potential hell of switching is too daunting at this point to reduce my sense of inertia.
What's in your wallet?

Skype is apparently holding an event for bloggers and media today in London, showcasing hardware produced by its growing ecosystem of partners. Unfortunately, a prior commitment prevents me from going. Meanwhile, it will be interesting to observe eBay's share price at the market opening today, as long-standing speculation comes to fruition. It would be great if Maestro was an additional payment option...
Lawyers, start your timesheets

In the world of failed romance, they say that "looking good is the best revenge," but when in doubt "sue the bastard" is a reliable fallback. KPN's portrayal of its open attitude towards sharing 28,000 local VDSL access nodes certainly makes it look good next to "bad old cable" (as if many of its competitors will actually be willing/able to fund such a move), but just to drive the issue home, the company is taking the Dutch state to court seeking an end to assymmetrical regulation of PSTN and cable. Ostensibly this relates to KPN's lack of flexibility in setting tariffs, but following on from apparent moves (I say "apparent" because there have been no visible formal steps in this direction) to force unbundling on cable players and oblige them to itemize transport/access costs separately from content costs on customer bills, it's potentially another piece of bad news for MSOs.

Wednesday, June 28, 2006

Dark visions

My man Om is working on a piece on BT for Business 2.0, and was kind enough to call me for my thoughts yesterday. One of the things I highlighted in my comments was that I had concerns about how the current structure of BT (or any other integrated carrier) could deal with the complexity of reconciling the very different commercial agendas of its retail unit with a structurally separate access unit. I did say that, to its credit, BT is further along this learning curve than anyone else, by virtue of the fact that no other carrier has faced this scenario yet. Little did I know at that time that Viviane Reding was about to drop the structural separation bomb in a speech last night.

Take some time and read it through. I note with interest the idea of an independent European regulator, a single pan-European spectrum management agency (which sounds like an absolute nightmare), and the concept of structural separation as a method for dealing with regulatory obfuscation. In particular she lays down some very downbeat comments towards Germany, citing its low level of capital investment in telecom as well as its relatively poor levels of broadband penetration - both of which it would seem she lays at the door of regulatory inertia. Note in particular her adamant message that VDSL and FTTx do not constitute new markets exempt from regulation (I have argued this for some time), and that a move towards unilateral regulatory policy would set a dire precedent which would damage Europe as a whole. Pretty strong stuff.

I am puzzled, however, by the extent to which she seems to be enamored of the AT&T breakup (failing to mention that it has all but recoagulated over the past year) and the dual-infrastructure (DSL/cable) nature of facilities-based competition in the US. In my experience, none of the brighter minds in industry in the US are anywhere near as sanguine about the situation on the ground there, and many would argue that the entire access formula needs to be rethought from scratch. The pressure to do so in Europe will also increase, in my opinion, as the move to FTTC/VDSL, even without regulatory holidays, poses some seriously high barriers to competition. Consider what I was trying to say here regarding KPN's migration to a network of 28,000 local access nodes - even assuming that the consultation results in the regulator giving a higher comfort level to the existing unbundlers, they will still have to foot the bill for backhaul and other technology migration costs, let alone the cost of colocating their own street cabinets (which may not even be possible under planning restrictions in some areas). The legal wranglings have yet to even get going.

Monday, June 26, 2006

Back in Blighty

Well, I promised that my absence from the blogorama would coincide with some big events, and here are just a few, as well as some other bits and pieces potentially of interest. I haven't really had a chance to catch up on blogs or anything else, so apologies for any unintended repetition:

Nokia-Siemens: I don't think anyone was particularly surprised about this, and from my perspective I'm most intrigued about how the dynamics in the battle for the home gateway (and all the FMC developments around it) change as a result.

Linux for mobile got a big shot in the arm.

Elsewhere, Microsoft fired a number of barrels at once in its quest for the unified communications Holy Grail, announcing a number of partners in its "ecosystem," one of which is Siemens, which will "advance the transformation of telephony, audio-, video- and webconferencing, instant messaging and e-mail into a single unified communications platform".

The Amsterdam FTTH project won its court battle against UPC, following a broadly successful outcome in the separate vote in Parliament. However, this is not the end of the story, and I expect the cable lobby to try some other approaches - watch this space.

KPN struck a deal giving it a controlling stake in iBasis, which we all know is a key supplier of international termination to Skype, and more recently Yahoo! I think this deal pretty clearly shows that KPN management "gets it" and is trying to claw back some value from the VoIM shift which is occurring, and frankly I'm surprised that no other incumbents have made moves in this direction. Is Level(3) in someone's sights?

FMC in the UK got a bit harder as Telefonica/O2 took out UK start-up Be, which means I'm only 50% as likely to have to eat my shorts as I promised here.

Henry Sinnreich has joined Adobe. Contemplate for a moment the number of desktops globally which support some version of Flash (think "all of them"), then consider the growing number of sites/communities built in Flash (YouTube for a start), and then think about how Adobe might want to capitalize on that valuable real estate poisition by incorporating voice, video and presence. Then be afraid, be very afraid. (Also check out Richard's other interesting posts on the events he has been attending.)

I received a semi-anonymous email alerting me to another third-party Skype directory service, in which I could find myself, but so far none of my other contacts...

Here's some interesting coverage of the coming MVNO wave in Japan. I'm curious as to why Willcom is not mentioned. This is a company which, to my mind, is positioning itself to exploit just such a development. I was very impressed with the management team, which I was fortunate enough to meet up with a couple of months ago in London.

Vonage continued to shed market cap, edging ever closer to the $1bn valuation which I speculated about some months ago.

Yet another survey, this time from Germany, shows that prosecutions have no long term effect on file sharing behavior.

EuroTelcoland continued its stunningly awful form, underperforming STOXX 600 by 3.5% in the period I was away, bringing it to 6.6% underperformance year-to-date, once again the worst sector by a wide margin.

On a more personal note, on my travels in the USA I had an opportunity to try out both the XM and Sirius satellite radio products, and I was hugely impressed. My brother, who spends a lot of time on the road, would sooner chop off his right arm than give up his Sirius service, and his view is that Sirius is mopping the floor with XM, a view supported by the share price performance of the two over the past month. Also, returning home from the airport early yesterday morning, we saw a Sky engineer pulling up at our next door neighbors' house to do an HD multiroom install. It seemed to take a long time to complete, though on the positive side my neighbor said he only placed the order last week. I will be interested to get their views on the service.

Wednesday, June 14, 2006

Gone fishin'

EuroTelcoblog and Chaotica are off on holiday to the USA, back online on the 26th. Inevitably, whenever I go on holiday something cataclysmic happens in the sector, so watch out for mayhem. In the meantime, a couple of points before I go:

  • The Dutch Parliament delayed its vote yesterday on proposed restrictions of municipalities - apparently the comfort level with casting the future in a cement overcoat has diminished.
  • Keep an eye on Keith McMahon's blog. Something tells me he's going to produce something pretty interesting in coming days.
  • Congratulations to Om on his own 2.0 transformation. We had a chat one evening when I was at VON Stockholm and he told me something was up, but I had no idea what. Who knows what other transitions are in store?

Goodbye EuroTelcoland, hello home of the internet!

Click up or shut up

Just arriving in EuroTelcoblog's inbox one minute ago was confirmation of Skype integration into 14 categories on eBay, selected on the criteria of "Skype’s ability to positively impact the transaction." The categories are:

Automotive GPS devices
Camera and photo lenses and filters
Wired networking routers
Skype devices
VOIP / Internet telephony
Diamond solitaire rings
Real estate (residential, commercial)
Manufacturing and metalworking
NBA basketball cards
Silver coins
Lost in Space collectibles
Radio control toys
Cars and trucks

Apparently, eBay considered that these were categories where "instant communication can greatly facilitate trade, such as those with high average selling prices, complex products, or new technologies that can generate a high volume of questions. Additionally, eBay selected categories with a local component, such as large items requiring local delivery or pick up, and those with a highly enthusiastic community, such as collectibles."

I will be fascinated to see what sort of feedback comes out of the eBay community after launch on 19 June.

Tuesday, June 13, 2006

Ventriloquism 2.0

A number of Dutch mega-uber value readers have been writing in response to the VVD party-led backlash against muni-fiber initiatives, which runs in strange parallel to the UPC court case against the Amsterdam project. Some of them have expressed extreme consternation, and one has been doing some digging. It would appear that a Mr. Edwin Evenhuis, Manager of Public Affairs for UPC, is also the chair of the VVD party committee on Culture and Media, in which capacity he advises Senators, MPs and MEPs (that's Members of the European Parliament, for clarity) on culture and media policy issues. On the face of it, then, it would appear that a senior executive from the largest Dutch cableco is also in a policy advisory role to the party driving the proposed restrictions on municipal fiber.
Telco 2.0

Keep your eye on this site, which should go live today. You won't regret it.

Monday, June 12, 2006

Stacking the deck(-chairs on the Titanic?)

Just ahead of tomorrow's vote in Dutch parliament on revisions to telecom regulation, the CDA party, which last week seemed to shock many with an apparent backing of the pro-cable line against muni-fiber, today has seemingly adopted a more measured stance. However, they still insist on a finite period (five years) of financial involvement for the municipal governments, after which divestiture must occur. Perhaps this party can afford to appear a little kinder, while the real tough guys have crafted a heavy-handed draft revision to Chapter 5 of the Law on Telecommunication to be voted on tomorrow, containing some strange and ominous elements. Article 5.15 of the draft states that municipalities may not have any financial stakes in telecom services, to which many would respond, "What about Essent and Delta, which have municipal shareholders and deliver end-to-end services as monopolies within their regional footprints?" Such cases are grandfathered in Article 20.12. My online English-Dutch translation tool tells me the appropriate phrase to use at this point is "Ik ruik een rat."

Friday, June 09, 2006

Via the BackChannel

The folks over at BackChannel have produced (using their ZeroSum platform) an interesting report in conjunction with Total Telecom on UK business ISPs, which contains some surprising data. BT's not number 1, and the market is a lot more fragmented than you might have expected.
One man's vegetation is another man's...

Last night I had the pleasure of moderating a panel which brought together Skype, Yahoo!, Google and Microsoft in front of a large group of telecom executives. As far as I know, everyone survived. Read more about it here.
Here come da judge

Today the Amsterdam muni fiber project gets dragged into court by UPC, against a background of heightened political sensitivity. A couple of mega-uber value Dutch readers have responded to my plea for local context. One is fairly moderate, saying that the views of the CDA and VVD parties are driven by a belief that the carriers in the market should be left to execute the construction of true broadband, and that municipal government involvement might bring complications and bias into the equation. The other expresses dismay at the CDA's stance (I get the impression he is a CDA member), claiming that it has fallen under the influence of the VVD, which in turn he characterizes as being under the influence of UPC and cable industry lobby VECAI. Want a sustainable career in telecom? Become a lawyer.

UPDATE: I just received the following impassioned response from a mega-uber value reader:

"With absolute astonishment we are witnessing an apparent successful lobby in Dutch Parliament to block municipalities from investing in modern fiber infrastructure as a life line to secure their future as an attractive city in which to live and work. After a half a decade of building up world class expertise in modern infrastructure as a premise to innovation, legislation threatens to throw this away with the stroke of a pen. Apparently in this low-lying country where its Premier, Mr. Balkenende, is leading the National Innovation Platform, members of its parliament do not fully grasp the role of a modern communication and information infrastructure as a premise for cutting edge innovations. With Japan already seeing a decline in the absolute number of DSL connections in favour of future proof fiber connections, I am afraid Europe is yet a richer example of uncomprehending political leadership."

Thursday, June 08, 2006

Getting out of the kitchen

Carphone Warehouse, Orange, and Sky are turning up the gas (at least Sky is not adding to global warming) in the UK broadband market, and I would argue they will be joined by T-Mobile and Telefonica before the autumn leaves fall. So I guess it's hardly surprising that Cable & Wireless' long-suffering Bulldog unit is ditching the retail market in favor of being a ULL-based wholesaler for the really serious disruptors, presumably potentially including the likes of Telefonica and T-Mobile.

I guess the original Bulldog employees must be fairly disappointed (particularly the 150 facing unemployment) that the company's early promise in market disruption has been eclipsed so quickly, leaving it as enabler to those with deeper pockets and stronger stomachs. Still, it could be worse - yesterday Level3 had to issue a press release correcting erroneous media reports that CEO Jim Crowe was dead! (Turns out it was the CEO of L-3 Communications)

Wednesday, June 07, 2006

The battle for the third way

First the Amsterdam fiber project gets dragged into court to explain itself at the behest of UPC, and now political party CDA (Christian Democratic Alliance) says it wants to stop municipal networks in the Netherlands. I guess those who wish for demilitarization of access must arm themselves for legal challenges and lobbying activities. If there are any Dutch readers out there who could give those of us outside the country some perspective on CDA and what their likely agenda is, it would be much appreciated.

Tuesday, June 06, 2006

Back to the future, again

Om has noticed the Ericsson acquisition of Netwise in Sweden, and asks for views on whether it's a good deal. Not knowing the company to any extent (beyond the fact that it’s a significant player in Europe in contact management, call center solutions and enterprise VoIP) I’m not really in much position to say. The SEK 300m consideration is roughly two times historic sales and 13x historic EBITDA, so not extreme on the face of it, though I don’t immediately have any comparables to hand to definitively say.

What I do find really interesting is the historical perspective. It wasn’t so many years ago that Ericsson’s VoIP skunkworks in Norway had an amazing range of talent, which it "downsized" when financial distress set in. (I am also told that Ericsson flubbed an opportunity to acquire Opera at a knock-down price, but that is a story better told by those who were there - and very ironic, considering the connection of Opera with JAJAH, which is pretty much nowhere...) These people all went on to do some pretty impressive things – including Alan (later with GIPS, then Telio), Thomas Anglero (the original CEO of Free World Dialup - check him here describing what was basically the Skype business model two years before Skype emerged on the scene), the HotSip crew (I think they were part of Ericsson Sweden) and the other key GIPS staff who went on to form Camino Networks, now part of Skype. What sort of place would Ericsson occupy in the fabric of the VoIP world today if it had kept these people together and let them fly? We will never know, and to be honest, this deal looks to be aimed at something a lot less visionary. It does, however, raise for me the question of lost time/opportunity and the cost of playing catch-up.
Over to the dark side

The past couple of days I've had a bulge bracket firm's URL all over the site like a bad rash. Guys, make sure to come over to Chaotica in case you might have missed something!
Newsflash: Free broadband sells

Carphone Warehouse released its annual results today (I wonder if there was any psychological warfare planning involved in the selection of the date 6/6/6?), and prominently featured early on in the release is the revelation that as of yesterday, 340k people had signed up for its TalkTalk "free broadband" proposition since launch on 11th April. To put this in perspective, that's nearly 6,200 per day since launch, and probably puts the company in a de facto fifth place in UK DSL from a virtual standing start. Of particular interest to me is the fact that only a little over half of these newcomers are from the existing CPS customer base, and a further 10% are from the existing DSL base. In other words it looks like over a third of new TalkTalk broadband customers are complete newcomers to the company. As I pointed out here, there are numerous execution challenges, but the company also has a brand to kill for in the UK, and these early indications of demand seem to bear that out.
Net neutrality debate a boon to creatives?

One fascinating thing about the huge Net Neutrality controversy is the extent to which it seems to be stimulating a kind of open source video creative community, which has risen to the challenge of creating a viral public information campaign of a sort (some of it well-intentioned but stultifyingly bad). Director Stefano Boscutti has sent one of his works my way. I like the juxtaposition of a dirt track for the "Information Superhighway."
Bumps in the long road to Vodafone 2.0

My cyberfreund and longstanding mega-uber value reader Keith McMahon has been burning the midnight oil in his dissection (vivisection might be a more appropriate term) of Vodafone's strategic vision, and pointing me to another peripheral story of disruption which may have much more profound implications. Elsewhere, another mega-uber value reader chimes in with the following anecdote, which underlines just how much pain lies in the road from here to there:

"As my personal 12 month contract was expiring, I contacted Vodafone customer services and spoke to an account manager... discussed various options and was told to phone back later in the week to check on stock levels for the Nokia N80.

- At this point the upgrade handset price was £120
- Mid-week it was £80
- Today, I have just agreed £30

Retail this is a £460 handset, so based on my tariff they are giving me two years' free line rental in the handset subsidy. There are some good things about high churn..."
Every net is full of holes

This astute observation from the immortal Alan Partridge has stood the test of time, and also allows me to work an oblique and pathetic Swiss Cheese reference into this post. A Platinum Club charter member and long-time mega-uber value reader alerts me to something which I missed a couple of weeks back, and haven't seen coverage of anywhere else. The Zurich municipal electrical utility company (EWZ) has a diversification strategy into telecom, and the city council has applied to the district council for a CHF200m loan to build an open access FTTH network. Unsurprisingly, Swisscom and Cablecom have made statements about how this throws up questions regarding the role of the state and of state aid. The three year pilot phase expires on 8th July, after which the next phase of buildout will be put to a council vote and public referendum. Thus another front opens in the emerging conflict between muni nets and vested interests.

Monday, June 05, 2006

Monday morning essential reading

Thomas Anglero yesterday wrote a thought-provoking piece on the next phase of telecom transformation: Utilicom. He's got some interesting points, and it seems to me that awareness of the potentially advantageous position of utilities is probably a lot higher in his home Nordic region than perhaps in other areas - maybe these countries are just getting there ahead of the rest of us.

Elsewhere, Vincent Dekker at Trouw (Dutch) seems to be ruminating on Dutch-specific aspects of the "water and wine" comparison referred to in the KC Claffy presentation which I linked to last week.

Fascinating how ideas spread virally across borders and language barriers. Also fascinating is how certain blogposts sit largely unnoticed for months before springing into life. Back in February I posted a link to Lee Dryburgh's piece on Norman Lewis at eTel, though it didn't seem to generate much notice. That's probably because I was too lazy at the time to explain why it was such a good read - but Thomas did last week, and now I can see the effects. Judging from my email inbox, this link is now being exchanged by some influential minds in telecom, and seems to be taking on a new life.

Thursday, June 01, 2006

Noteworthy points

The afternoon wears on and I am trapped in an Excel spreadsheet, so here are some succint tidbits:

  • Vonage is telling customers who subscribed to the IPO to pay up
  • Martin, whom I had the pleasure of seeing this morning, weighs in on Vodavision
  • Richard Marshall, another smart person up in Edinburgh, has started a blog
  • The Pirate Bay, shut down yesterday, claims it will be back up (in another country, it would appear) within two days. It's worth noting that TPB got a lot more popular after the closure of Suprnova, and became bigger and badder. Slyck is right when he says that fighting is good for building your muscles.
  • I stumbled across this excellent presentation by KC Claffy of Caida, delivered a couple of weeks back at the SANE conference in the Netherlands. Favorite quotes: "Society has decided IP is like water... strong implications for an industry structuring itself to sell wine," and "Best available data suggests that moving IP packets around is not even a for-profit enterprise." (Shhh... Don't tell any telcos.)
  • As it's the beginning of a new month, it's time to check the monthly data from the Amsterdam Internet Exchange, which appears to have been flat month-on-month in May, though on a daily basis is slightly down. Any views out there as to why that would be?

Oh well, back to spreadsheet hell...

UPDATE: A couple of mega-uber value readers have responded to my question on AMS-IX traffic trends with the following observations. One points out that the weather was pretty good in early May and there were a handful of national holidays which might have exerted some influence. He also points me to the annual graph, which shows a sharp growth in the second half of the month. The second reader says that large telcos in Europe are increasingly shifting towards private peering arrangements with large players, and in some cases are de-peering from ISPs who generate a lower volume of traffic than they consider to be economical. His point is that the influence of the major telcos will progressively disappear from stats produced by the public peering points.

VoIP? Never heard of it

OFCOM's consumer panel has released an update on consumer attitudes to, and awareness of, a variety of communications services in the UK. This makes interesting reading, and includes for the first time some questions on VoIP. Only 10% of respondents claimed to understand the term "VoIP," and only around 16% overall claimed to have heard the term (page 15), with awareness in Scotland, Wales and Northern Ireland very poor. Overall, respondents were far less inclined to keep themselves aware of new developments/options in fixed line telephony, and the inclination to keep informed about both mobile and internet declined pretty sharply from the previous survey in 2004 (page 22).
Soul searching

Vodafone wants to develop an advertising stream, and it's pretty much a given that advertising in the mobile context is going to be most compelling and profitable when tied to search - just ask Google, Yahoo!, eBay and Microsoft. So I guess some tables and desks in Newbury are being pounded in frustration at Nokia's news out this morning about the expanded availability of its Mobile Search application, to include Denmark, France, Italy, Norway and Spain. As I've highlighted previously, the directories players (Nokia's partners in this initiative) are already doing some interesting things with click-to-call, and we know that SIP figures prominently in Nokia's pipeline. Wonder where this is heading?
Every day I love you less and less

I remember that my first question in an email exchange with the newly launched Vonage in fall 2002 was, "Is the company's name pronounced like 'mirage' or like 'damage'?" Of course, they responded "damage," but I don't think they appreciated how prescient this would turn out to be - and not just for them.

Over at Seeking Alpha, David Jackson, the hardest working man in the financial blog business, jumps on the high pile of negative commentators with a short and sour summation. Just yesterday I was pondering what would happen if the institutions take umbrage at the "preferential" treatment given to the disgruntled retail investors - once again the real beneficiaries of the VoIP revolution may turn out to be the lawyers.

I also had a look a the valuation based on yesterday's closing price of $12.02, which is a market cap of $1.87bn, and recalled a bit of speculation on my part sometime back that we were looking at a figure around $1bn. Well, we're halfway there, and it's only been a week.