Friday, December 23, 2005

Off to the shops!

Posting may be a bit thin for a few days. Enjoy the sacred or secular seasonal observance of your choice, or not (that should cover all the potential sensitivities).

Peace on earth and IM goodwill

Blessed be the third party interoperability geeks. A mega-uber value reader pointed me towards this big announcement yesterday, and I was just starting to post on it when I realized that Thomas has already done a great job with it. I would only add that Google has the GAIM-master on board, so clearly the company itself will undoubtedly also have something exciting in the works beyond the AIM deal. It's also nice to see Skype dragged (undoubtedly kicking and screaming) into this process without the need for the usual niceties. Meanwhile, in Mac-land, Om and Andy have both written on developments around Gizmo (for what it's worth I am seeing a lot of VoIP geeks who have always refused to use Skype turning up on Gizmo).

In all the years that I have been pestering clients about VoIP/IM, I have never once said that the PSTN would be killed outright as a result. Rather, I have argued that if VoIP/IM communities got big enough and interconnected their various closed platforms, the PSTN would be progressively less relevant. It will be a death of 453 million cuts, and in 2006 it will move into higher gear.
Fancy a change of scenery in '06?

BitTorrent is hiring... Intriguing desired competencies:

  • Design and implementation of large scale search engines
  • Experience in algorithmic video processing

I bet the Friday afternoon office quiz is brutal.

Take the EuroTelcoblog holiday challenge

As we're nearing the peak of the silly season ("I'd like to discuss razor stubble, please."), let's indulge in a little silliness ourselves. This morning I woke up, inexplicably, with the word "WiBro" in my head, and I started thinking about how telcos around the world might "overbrand" WiBro in the future (let's ignore the fact that spectrum availability may render some of these infeasible in any event). So, I have put together a list of 10 fictitious WiBro brands/marketing slogans of the not-too-distant. Can you identify which carriers I am referring to? Ten-out-of-ten wins you a Gmail account invitation and promotion to the EuroTelcoblog Platinum Club (perks currently under development).

1. T-Bro
2. Can-you-hear-me-now-Bro?
3. Bro Zone
4. The Future's Bro
5. Raising the bar, Bro
6. We never stop working for you, Bro
7. Bro-mode
8. Live! Bro
9. Express Yourself, Bro
10. Bro With a Passion

Thursday, December 22, 2005

Fiber supplement

I just received an SMS reporting that the Amsterdam City council has apparently voted unanimously (45 out of 45) in favor of Phase One of the municipal FTTH project, which I have written about ad nauseum in the past, but which most of the market seems to have steadfastly ignored - no doubt that will change now (though the formal shareholder agreement has yet to be ironed out). I had previously heard predictions that we might expect 75 - 80% council support, so this looks like a complete knock-out blow for the proposition of muni networks. Call me alarmist, but I think this opens up a dramatic new chapter for EuroTelcoland, and is a perfect start for 2006 for those who wish to see more robust connectivity for all!

Wednesday, December 21, 2005

And one thing more...

In all the reporting that I have seen in recent days ahead of the Google/AOL deal, nowhere did I see a reference to point four in this press release. That's some afterthought, having GTalk and AIM users able to communicate, though I guess it could be considered somewhat elementary given Google's potential to harness GAIM to unilaterally achieve universal interoperability for GTalk. At any rate, it's interesting to see such a prominent placement of voice and IM in a deal which the media has overwhelmingly covered as a search/content-driven transaction.

Tuesday, December 20, 2005

Year of the Bear

For our monthly sector product (which I found recently, somewhat to my surprise, that some people actually seem to read) I entitled my end of year piece "Annus horribilis, annus mirabilis," which is precisely how it feels.

As of the close of play today, EuroTelco has underperformed the STOXX 600 by 21% year-to-date, and is the only sector to have lost money in an otherwise buoyant stock market. If investor attitudes were country music song titles, then this year would be called something like "Take Your Share Buyback and Shove It." Results in Q3 contained some bleak outlook statements regarding the next couple of years, to be followed (of course) by a strong recovery - a special Christmas menu of humble pie followed by jam tomorrow.

However, for all the shock and horror, it was a truly amazing year, the likes of which we may not witness again:

  • The vision, if not necessarily the net present value, of voice at the edge of the network was decisively validated - the sheer pace of innovation unleashed around this issue has been nothing short of jaw-dropping.
  • Decentralized and social media exploded this year, and it's difficult to find any company which does not claim to have a strategy for capturing the value created by user-generated content. I'm pretty sure this will be as easy as pinning Jello to the wall, but many will try anyway, and the facilitators will get paid and/or acquired.
  • There was also a lot of wild and wacky newsflow around alternative access technologies.
  • Things turned serious for P2P, and P2P got serious.
  • Google scared the hell out of everyone, well me at least.
  • The floorspace occupied by VoIP, IPTV and telco triple play industry events exceeded the total surface area of Canada for the first time in history, and the delegates to these shows, marched side-by-side into the sea, would form a neverending column - these are both facts, and I stand by them.
  • Equally hard to believe, but much more serious, was the RBOCs attempt late in the year to crash the hippy love fest (as they would probably term it) which is the open internet.

I've left a lot out, but as telco watchers of the future will no doubt say, if you can remember 2005 you weren't there!

My favorite telco event of the year was actually a fictional one - the arrival of the Wasp T-12 Speech Tool. I still occasionally get hits, sometimes from telcos and handset makers, searching for this - "What is the ARPU potential?" I can imagine them hopefully saying.

Anyway, it was an amazing year to behold and be part of (in my small virtual way), and no doubt 2006 will bring more wonders and horrors. I look forward to strolling through a nuclear winter EuroTelcoland in 2006 with you, my dear mega-uber value readers. Thanks to all of you for making this the best, and worst, year ever for EuroTelcoblog. God bless us every one.

More Christmas fun

Stylish, multicultural, Thomson.
More self-esteem damage

I'm still pessimistic that anyone reads or cares much about surveys like this one, but it certainly doesn't have a happy ending for telcos (and telco analysts) if they are reading.

Monday, December 19, 2005

More heartwarming Christmas greetings from EuroTelcoland

Today brings festive greetings from Alcatel and KPN. Interesting that the telco and equipment e-cards I have seen so far this year seem to be entirely devoid of any real sense of fun. Meanwhile, the "old school" directories player Yell wants us to play. Is telco in a state of holiday depression?

Friday, December 16, 2005

You've really got to love television a lot

French market stats

Just out, a set of statistics on the French market. Interesting observations:

  • 18% of the population over 12 has no fixed line phone
  • 7% of the population over 12 uses voice over DSL (via Freebox, Livebox, or other access-provider based product)
  • 4% of the population over 12 uses Skype or another IM client capable of voice.
More power to Christmas

With 32% of analysts sellers of the stock, I don't know how supportive we've actually been, but here's what we got from BT IR today - created in-house. Hey, this convergence thing is really happening!
The ghost of Christmas past

Christmas is a time for reflection and nostalgia, so let's take a break and relive a great moment in telco history, verbatim and courtesy of a nostalgic Triple Platinum mega-uber value reader:

How the world got flat-fee Internet (and why they are still trying to “correct the error”).

This story is from a supplier to the cable industry. He once asked a bar full of top-dogs from the industry if his reconstruction was correct. They told him he only made one mistake: it was actually on a golf course...

Act 1 : middle of the crazy 90’s, USA, board room of a leading cable company.
Jack (CEO), Ted (CTO), Dick (VP Marketing).
Ted: Hey guys, I tested these new boxes from XYlabs and it works. I get Internet access on cable.
Jack: Great. Now we can compete with dial-up. Dick, start selling it. What are you going to charge for it?
Dick: Dunno. Ted tells me he can’t shut it off so we cannot sell minutes. Furthermore we don’t have the billing systems now to charge anything but a monthly fee.
Jack: Shit. If we wait someone else will start with this. What do you think they are willing to pay per month?
Dick: Uhh, maybe 50 bucks?

Act 2: competitor cable company
Harry (CEO), John (CTO).
Harry : [Expletive deleted] Why don’t we have this Internet thing? What have you been doing? Sleeping?
John : [Blah, blah, feeble excuse]
Harry: I don’t care. Get the f”*& out of here and get me the results.
John: I got this stuff from Xylabs and it works indeed.
Harry: Roll it out and tell marketing we will charge whatever the other guys charge.

Act 3: Telco
Carl (CEO), George (CTO)
Carl: Dammit, the cable guys are selling their Internet access like crazy. We need to get an always-on product too. George call Lucent and find out if they have something.
George: They say they will have something called ADSL soon.
Carl: Get it as soon as possible, and get the cost down, we cannot charge more than the cable guys.

Act 4 : leading cable company
Jack (CEO), Charles (CFO), Dick (VP Marketing).
Charles: The more we sell this Internet product, the more losses we create, the fees are too low to recover the investments. Dick you have to tell your customers we are selling this at a loss so we can raise prices.
Jack: No, no. Look, the share prices are going through the roof, our option package is worth millions, invent a new EBITDA-something to show we are doing great.

And so the world got an abundance of flat fee internet access. And since that time the industry is trying to backtrack to the wonderful times of selling “Internet by the Pound”.

Thursday, December 15, 2005

Old year, new new thing

I have been struggling for the last few days with year-end deadlines and other chores, and have fallen woefully behind in blog-reading, company announcements, posting, and everything else. This is a catch-up post, sort of a Christmas basket, if you like.

Firstly, a housekeeping note. Someone wrote in this week with the following after my short post on Yahoo!'s launch:

"Ordinarily I love reading your blog, but when are you going to do some serious modelling on the VoIP business case? This stuff about Singapore is not up to it. We heard it all in 1997 at the ITU Asia Telecom show. Even you can figure out that's nearly 10 years ago! You should be VERY much more critical. There is no business case for VoIP - not now, not ever, NEVER!"

I thought that by using phrases like "IP as a blunt weapon of mutual annihilation" and "IP-fuelled deflationary spiral" with great regularity over the past two years, I had by now conveyed the view that I don't exactly think many people are going to get rich out of VoIP services - with some obvious exceptions (and here I would also include regulatory lawyers, hockey-stick-adoption-curve industry forecasters, industry trade publications and particularly conference organizers - when will we see the first perpetual itinerant VoIP conference on a cruise ship? 2006 could be the year!).

To be sure, there are today some successful businesses in the VoIP space, which wouldn't exist if the legacy pricing structures of the PSTN didn't give them something to arbitrage against. That's fine for as long as it lasts. However, some time ago I stopped even talking to clients in terms of VoIP as a business model per-se. These days I talk about it (I think for very obvious reasons) as a means to an end, and that end is gaining and maintaining a share of consumers' attention, which can then be directed to something else that generates serious money. I very much doubt that Yahoo! has any expectation of making a significant amount of money from its voice offering. I think it's more likely that we should view it as an element of "AAC," or Attention Acquisition Cost. I didn't think I needed to spell this out, but there we have it.

While on the issue of Yahoo!, I see that Andy has been doing some interesting musing on a wireless strategy, and this matches up nicely with some other developments this week which started me thinking. A lengthy and valuable chat and brainstorming session with Platinum Club charter member mega-value reader Thomas Anglero then put all the pieces into place. So here's a bold prediction for 2006, and it goes something like this...

I haven't really seen any commentary on this yet, but GIPS came forward this week with two new iterations of the Voice Engine - one for Symbian 9 and the other for Windows Mobile 5.0. Each is compatible with previous OS generations (7 and 8 for Symbian and 2003/04 for Windows Mobile), which opens up some interesting possibilities for lower end-user price points and a wider range of devices. This has been in the pipeline for a while, but it's particularly pertinent as we head into the new year. For one thing, it's pretty clear that Nokia is going to launch a staggering range of 3G devices over the next 12 months (and that something like half of the new models will also have WiFi).

It is also safe to assume that capacity utilization on European 3G networks is pretty abysmal at present, as the proportion of 3G customers to total subscriber base for companies like Vodafone and Orange is only 1 - 6%, depending on the country. As these exceptionally expensive assets sit built out to their statutory requirements and largely dormant, is there not perhaps a rationale for getting investors off your back and generating some wholesale revenues in the short term, by becoming an enabler of a flat-rate, data-only 3G MVNO?

The incumbent mobile players will have to take their own services this way anyway eventually, but not before there's no other choice, which means there's no particular rush - why not let someone else take the pain of working out the kinks, and if they become a successful franchise then acquire them, as TDC did with Telmore in 2G (and turned it into an exportable model)? For the newcomers, you've got yer wideband codec (with encryption in this latest version) to plug into a softphone on the mobile OS of your choice, global IP-to-PSTN termination should be pretty cheap (take a look at this Michael Robertson post where he claims his termination cost in the US is 1/2 cent), throw in some voice peering (this issue is going to be a big story in 2006), and you've got something truly compelling for the consumer. For the access-independent VoIP crowd, as well as perhaps the cable guys, this looks like a logical extension of what you've already got in place. My feeling is that what we see come out of IPMobile in Japan will be very much along these lines, and I also suspect that someone in Europe is bound to break ranks at some point in 2006.

Wednesday, December 14, 2005

Strange, but true, and not new

I am bemused by the flow of information on the net sometimes. Some fairly trivial stuff gets repeated and cross-posted ad nauseum, while other highly significant events seem to sit dormant for weeks. For the past three weeks I have been doing a large number of client meetings, in which I have discussed little else (at the popular request of clients) besides the possible implications of incumbent attempts to impose some form of IP interconnect on third party content/voice providers (for which read "household internet names.") My impression from these meetings is that these ideas have been entirely new to most investors (they have all invariably been both fascinated and appalled), though I have by no means been alone in expressing anxiety over these developments. (In fact, it was precisely this issue which prompted my online musical debut last week, which has today been Volokhed.) Today, however, some high profile sites have picked up on the issue, which should heighten awareness and paranoia levels considerably above what my feeble efforts could manage. I am, however, surprised that Slashdot seems to think that all this was speculation previously - no, it has been a matter of public record for a month, and comments on the Universal Service Reform bill are due on 23rd December. Merry Christmas, open internet, too bad you won't be around for the Congressional Christmas party next year!
Christmas wish list

For a recent presentation, I put together a mock-up image of a Google personalized page of the not-too-distant future, and some of this stuff looks really similar - except these actually exist. Personally, I'd like to see someone write an application which would allow me to access Blogger directly from my page, as well as Google Analytics - oh, and GTalk of course.

Tuesday, December 13, 2005

Euphemism of the day

In the conference call slides for this transaction, Vodafone uses the phrase "Vodafone approach is similar to that for a new licence." Translation - here is a 9m subscriber business which has to be rebuilt from scratch - Telsim capex for the past three years combined was apparently only $120m. Based on the $4.55bn transaction value and performance KPIs from H1 2005, it looks like Vodafone is paying $523 per sub for a user base which on average (again my calculation) appears to generate undiscounted lifetime subscriber value of $540. It's tempting to conclude that there is a slight air of desperation to make up for lost time in emerging markets.

Monday, December 12, 2005

Don't unbundle, bypass

Seeing product announcements like this makes me want to consider emigrating to the Czech Republic or Lithuania - I bet the food's better too!

I guess following the principal that the sun rises in the east, it would appear that Yahoo! has chosen to fire its opening salvo in Singapore, though I can't get the beta site URL to open (I would be interested to hear from any Singapore-based readers who can view it). The East is red with telco blood, and I guess it's flowing this way, though I don't see any signs of PSTN breakout in the European sites I've checked so far. (Uber-thanks, Hermano Nordico!)

UPDATE: A very helpful mega-uber value reader points me to the right URLs. Thanks!

Friday, December 09, 2005

Getting on with getting on with it

The UK Telecom Adjudicator's report for November seems to show some genuine improvement in delivery of ULL, and current projections are for bulk migration of around 500k lines over the next six months, or more than three times the current cumulative total of lines. Welcome to the 21st century!
Cat amongst the pigeons

Cisco just held its analyst shindig, with quite some attention given to "co-branding and revenue sharing opportunities" (translation - "stick 'em up"). Disruptive Dean was in the audience, and predictably asked a pointed question of Mike Volpi about the open internet (at seven minutes into the final Q&A session - watch the body language of the panel as he's asking the question). Mike Volpi's reply starts with the observation that broadband is not a "guaranteed right for human beings," and goes on to defend the carriers' positions in the sort of language we are hearing from the RBOCs. Along the way, he stresses that broadband is not a utility service. I guess not - my electricity company hasn't ever tried to charge me more for frivolous usage (such as having Christmas tree lights or playing an electric guitar) than responsible/essential usage (cooking my children's dinner). They pretty much just set the price and let me get on with using my electricity in the way that suits me. Hmmm... Mike Volpi, carriers' friend, defender of legacy telco investments against free-riders, where have I heard that name before?

Thursday, December 08, 2005

What's Estonian for "Don't Be Evil"?

Poor old Skype. First, a few weeks back, some comedians inside the Beltway produced some language which looked like it was written specifically to undermine Skype (I'm sure this was a coincidence). Then, as the post-merger dust settled, the two-headed Hydra of West Coast hyper-bloggers "ripped 'em a new one," as we'd say down South. Then yesterday Yahoo! delivered a little Christmas card to eBay (message - Christmas is cancelled). Now Verso, in the finest "kick 'em while they're down" tradition, has produced audited results of its Skype-killer, claiming it's validated, and throwing in a few nicely worded reasons for why Skype is a bad thing, just in case anyone had forgotten the message. And it's still only Thursday.

Wednesday, December 07, 2005

Not on my Amazon wish list

Dug this old chestnut out yesterday, a very interesting account of the BT IPO process, stolen from the Nikko Securities London library in the days just before the company shut down in late '98. The BT IPO was arguably the pivotal event in the development of the EuroTelcohell investors are living through currently.

UPDATE: Double Platinum Club charter member Chickenman chimes in to let me know that this book is actually very valuable. At £53.78, it's worth 25 BT shares at their current price, or around 3.8 shares at their mid-bubble high. Does that observation in itself prove something?


I alluded to this presentation slide in a previous post, and finally got around to converting it to a .gif using the amazing CaptureWizPro.

Granulate my presence

After an abortive attempt a couple of weeks back, dashed by a Canadian blizzard, yesterday I finally had a chance to catch up with Alec Saunders of Iotum, to discuss the company's Relevance Engine. (Rich Tehrani's post gives a great overview, which I won't duplicate here.) Suffice it to say that this seems to be a big step towards the kind of refinement of presence management which many have been yearning for. I would love to try it out, but at present it's only available in Canada, though I would expect that EuroTelcos may take a keen interest as they all pursue the Holy Grail of home gateway-centered/converged services. If we accept this proposition as being an attractive one to the end user, then a solution like Iotum's may be the essential glue to make multi-service communications a smooth and satisfying experience for the user, rather than yet another form of technoppression. I am also curious how the device manufacturers (both mobile and in the gateway/set-top box space) could run with this concept in future, particularly if we assume that devices inevitably become more context-aware. This is clearly only the tip of the iceberg, but it is an impressive start.

Tuesday, December 06, 2005

Your core, my loss leader

My boss just returned from the Centrica North America Strategy presentation, during which it was mentioned in passing that the company is offering new gas customers in Ontario five hours of long distance calls each month for free just for signing up. So here's a company giving away the core product of a 35% margin industry to bolster its own 5% margin core business. Any telcos fancy giving away gas?

UPDATE: Wow, Canadians love a bit of attention! A surprising number of readers from north of the border have written in with responses to this post. The best so far is this one, which portrays a slightly different view to that promulgated by Centrica:

"Just for fun, I called Direct Energy and after being transferred three time within Direct Energy’s customer service help desk, they finally asked me to call Rogers Telecom directly…which I did.

As it turns out, you have to subscribe to Rogers' home phone service for $29 CDN in order to get the free minutes and one free service (e.g, call display). At current rates, you can subscribe to a local home phone service from Bell for about $20-23 CDN + $6-8 for the feature. Therefore, Rogers is really using the LD as a simple means of acquiring the customer. While the offer sounds great, it does come at a
price of switching service providers."

My lament for the open internet

Recent sector shenanigans have got me down, so I have composed a short lament using this clever tool. If you have your own song inside, send it to me and we'll make a compilation.
Behind closed doors

The clock is ticking on data retention policy for the EU, and the good folks at EDRI (along with many others) are miffed at the process, which they question as being less than democratic and transparent. Not to mention that the entire exercise is almost certainly pointless and counterproductive. Point five of the letter to European MPs, being delivered just about now, is particularly insidious:
"5. The Directive requires more invasive laws. Once adopted, this Directive will prove not to be the ultimate solution against serious crimes. There will be calls for additional draconian measures including:

-the prior identification of all those who communicate, thus requiring ID cards at cybercafes, public telephone booths, wireless hotspots, and identification of all pre-paid clients;

- the banning of all international communications services such as webmail (e.g. Hotmail and Gmail) and blocking the use of non-EU internet service providers and advanced corporate services.

EuroTelcos will scream about the compliance costs, but if the long-term by-product is degradation of user experience for third party communications tools (as well as crushing financially weaker small upstarts), I very much doubt they will drown in their own tears. As with all these attempts at centralized control, however, I'm skeptical - every action invites a reaction, and this is just the incentive for a truly plug-and-play Tor.

Monday, December 05, 2005

Just because you're paranoid...

...doesn't mean people aren't out to get you, or so goes the saying, one of many common bits of "wacky" cubicle wisdom. My presentation to clients last week consisted of one Europe-specific section, and one global section dealing with the Attack from Cyberspace, and emerging telco strategies for dealing with it. Each time I presented this section I sat there thinking to myself, "This sounds completely demented - I know it's true, but I fully expect someone to tell me I've been smoking crack." Little did I know at the time that I was getting some of the best backup in the world. You couldn't make this stuff up, could you? I love the smell of napalm in the morning...

Beyond the quadruple play

The Centrica story alluded to below has started me thinking: once all the hot-ass quadruple play business plans have been executed, what's left for telcos? Well, I think for smart ones it will probably be something which seeks to amortize the costs of multiple other domestic services across a common customer base and set of functions, as Centrica has attempted to do (let's face it, no one cares how good your VOD offering is if they're freezing butt with a broken boiler, or if they're at the mercy of the fluid work schedules and opaque pricing of one of this country's many fine independent builders). At c.10%, operating margins in this business are lower than EuroTelcoland is accustomed to (but interestingly, are more than double that of Centrica's traditional core business). Then again, what are we working towards here, glamor or survival? I wonder how many telcos have considered this as a realistic option for the future, and how many would consider it beneath them somehow?

Good riddance to bad rubbish

Nice to be back in London, where advice like this is both readily given and universally ignored. Conveniently, it pretty much sums up investor views on telecom from my series of meetings last week, and also fits in nicely with a view of "the year that was" (the only STOXX 18 sector in negative territory year-to-date, etc...). More red on my screen today, largely as a result of the UK "quadruple play" story, and DowJones is reporting that Centrica has pulled the sale of its OneTel arm after only one bid was submitted at GBP100m. My boss, an energy analyst, reckons this is roughly the amount of invested capital in the business to date, i.e., it's a nil-premium bid.

The hills are alive with my mobile lifestyle

Oh, the havoc that my friends and I could have wrought with photo-sharing and blog tools back when we were living in Japan... Oh well, at least our spiritual descendants are putting these to good use. I agree with anenglishmaninosaka that this ad campaign from Vodafone, touting the virtues of the family calling plan just launched last month, probably pushes the boundaries of credulity, and as for me, I can't get away from associations with other images which make this even harder to take seriously. Surely a hired gun gaijin film star (a pouting Nicole Kidman?) might have been a better bet?
Triple play, we hardly knew ye

Apologies for the loss of momentum on Japan-blogging late last week. Too many meetings, too many late nights, I'm afraid. Back in a very grey London, with a tenuous grasp of time zone, there is nevertheless no respite from the deflationary spiral which is our beloved UK telecom market. This move is hardly surprising, given a well-telegraphed strategy by NTL. What is, perhaps, surprising is the speed with which a mobile piece is being pursued, and also the fact that the approach is inorganic. At the last set of Sky results, James Murdoch was asked about the possibility for a mobile piece to the SkyEasynet newco and remarked that he thought the company had enough on its plate in the short term. I would be surprised if that were still the case this morning.