Thursday, December 21, 2006
- Conversations with all market participants: January 2007, follow-ups in February/March 2007.
- Market research from Analysys et al: still on-going.
- Decision-making (or drafts): 07Q2.
Uncertainty persists. While KPN keeps working on its All-IP network, altnets are on the sidelines. KPN plans to launch VDSL service May 1.
Related news: in Germany the regulator just opened a consultation on IP-interconnection. It closes February 26, 2007.
Wednesday, December 20, 2006
Didier Lombard, CEO, threatens to divert investments to Asian manufacturers, should the EC finalize international roaming rate cuts.
Furthermore, if Asian companies are cheaper too, why not buy from them anyway?
I'm afraid the Dutch are notorious for this characteristic. It's not just college kids addicted to free downloads.
Happy Holidays, Scrooge!
The Radar TV show exposed how KPN milks the call center cow, when it comes to dealing with complaints over this VoIP/BB product. Of course, KPN blamed its own success of having to add 20k subs a week, when technical glitches are unavoidable. KPN at first was reluctant to lower the 45 c/min rate for the call center, but has now (temporarily) lowered it to 1 c/min.
OPTA claims the service is a telephony product, and therefore should be subject to telco law, demanding that any conflicts should be submitted to the Arbitration Board ('Geschillencommissie') for Telecommunication. KPN has explicitly locked out this option in the InternetPlusBellen terms. OPTA requires KPN to alter these terms by January 5.
I am not sure why KPN has declined to be subject to the Arbitration Board for this product, but it seems to mirror US regulations, where 'telecommunications services' are treated differently from 'information services'.
KPN claims it is working with ISPs to set up a new Arbitration Board for 'internet services'.
Google acquired Pyra Labs in February 2003 (no link on the Google site, but here), when it had 1m registered users for its Blogger service. In fact, I started this blog using Pyra's/Google's service in April 2003.
Monday, December 18, 2006
The important thing about this is that it is OPTA who will decide, not KPN. I believe KPN is trying to convince everyone of its reseller potential. I’m sure they have it, but I’m equally sure that KPN in reality isn’t serious about those efforts. I do not believe KPN would limit itself to service-based competition, i.e. competing on price alone. Also, KPN is trying to convey the message that there is nothing wrong with service-based competition.
It’s all about politics and creating some negotiating space. The same goes for those juicy statements of altnets, which unfortunately didn’t get any media exposure.
To name a few (not literal):
- Regulation should be abolished altogether (T-Mobile). Sound familiar? (hint: Deutsche Telekom).
- Selling MDF locations is not necessary for KPN’s All-IP network and it probably is illegal (ACT).
- KPN isn’t investing at all, they are not contributing to the general economy; all they do is relocate assets by selling certain ones (MDF locations) and buying back others (All-IP) (bbned).
- Should KPN be allowed to sell MDF locations, then we want to share in the proceeds (bbned).
By the way, I outlined here where we are right now. OPTA is due to publish the timing (sometime early 2007) of its findings this week: 1. Policy rules (‘Beleidsregels’) related to the closure of MDF locations. 2. A memorandum of findings (‘Nota van bevindingen’) related to a host of other matters, still to be resolved
What it comes down to, I believe is this.
- The All-IP network effectively means that LLU as we know it is coming to an end. This will happen in all markets, eventually, because fiber will be pushed deeper into networks and because everybody will switch over to IP.
- OPTA (or any other regulator) has to decide on a Fully-fledged Alternative (‘Volwaardig Alternatief’). If none is found, structural separation (to some degree) will be considered.
- The outcome will be the result of (1) creativity on the part of OPTA and politics (see above), (2) market conditions. The latter are comprised of several items: cable reach; FTTH reach; scale economies on the side of altnets, necessary for replicating SDF backhaul; KPN’s lead over altnets, since KPN started building the All-IP network in 2004. Of course, at some point regulators could say (as they did in the US): it is time to end regulation; altnets have had their chance; now if they want to compete, they have to build their own networks, or negotiate a reseller deals with network operators.
- In markets such as the Netherlands full separation will probably not happen, for the simple reason that cable networks have very high reach (as is the case in Belgium, Switzerland, Portugal, etc.).
- Partial separation (Openreach is still part of BT, but at an arm’s length) is a possibility.
It remains to be seen if all market participants can work out a Fully-fledged Alternative; if not, splitting up KPN is unavoidable.
Thursday, December 14, 2006
- Next week: an announcement regarding the procedure.
- Early 2007: OPTA's follow-up to its Position Paper, consisting of two parts. 1. Policy rules regarding phasing out of MDF locations (Chapter 5). 2. Memorandum of findings regarding other matters.
Altnets better prepare for the closure of those MDF sites. The timing could vary, but fundamentally it looks like a big win for KPN.
Wednesday, December 13, 2006
Sometimes innovation seems to go at breakneck speed, as testified by those invaluable Google Alerts I receive every day.
Just to name a few wonderful new things (or at least mash-ups of existing services or technologies) - several of which are from Down Under.
- Cohda Wireless (Australia) demos WiFi supporting handovers at 200 mph. This could enable VoIP and multimedia over WiFi. Bigger hotspots to rival WiMAX (not mention good old HSDPA).
- CSIRO (Australia) demos new technology, reaching 6 Gbps at 250 meters.
- Vodafone Australia enhances its Lara platform for voice recognition by replacing proprietary software by Holly Connects’ ‘Holly Voice Platform’, which in turn uses technology from Nuance and Audium. Another good deal for Nuance and I believe a great way of improving the cellular experience.
- Zoom Technologies launched the Model 5800 Zoom VoIP Freedom ‘Chooser’: select your VoIP provider from a list of 25 SIP-based operators. This ATA also handles calls to the PSTN and calls coming in through WiFi (for cheap international cellular calls).
- Ingenio will bring pay-per-call ads to mobile phones, working with JumpTap.
- Gotuit Media launches SceneMaker: tagging videos on YouTube and Metacafe to enable deep video search. Web 2.0 meets video search. Our attention span is getting shorter. “For example, a user who finds a great joke within a 10-minute comedy video posted to another social video site will use SceneMaker to "VideoMark" just the 40 seconds of video that contains their favorite joke.”
- Photobucket adds mobile uploading.
- Mozilla only recently put out Firefox 2.0, and now there is Firefox 3.0 (beta).
- The Venice Project launches in private beta. First reactions aren’t very good for this new P2P video distribution platform.
Tuesday, December 12, 2006
Below is what I found most interesting from all the recent paperwork (December 4). Source material is in Dutch only.
OPTA targeted late December for a Decision Paper, but I doubt they will be able to make this deadline. This must be a tough nut to crack, as opinions diverge widely. Could it lead to a blue print for next generation regulation, post LLU?
1 Rough outline of KPN’s All-IP network
KPN plans to close c. 1100 of its MDF locations (Man Distribution Frame, ‘nummercentrales’, home of LLU) and to extend fiber to c 28k street cabinets (home of SLU, subloop unbundling).
OPTA needs to find a ‘Full Alternative’ to LLU. It will consist of SLU, SDF backhaul and WBA (wholesale broadband access).
OPTA in its Position Paper gave heavy support to KPN’s plans.
2 Main arguments from market participants
It seems only natural that this would put some obligation onto competitors to also invest. Whether this is the case or not, LLU is coming to an end.
In general, altnets have large issues with OPTA’s position paper. Finding a Full Alternative to LLU is a complicated matter.
Should SLU be unfeasible, then WBA is the only viable offering. This implies service-based competition and the remonopolisation of the local loop. Arguably, it also implies mere price-competition. This would sort of copy the US model, where open access to broadband networks and new build-outs was abolished – altnets had had their chance, after 8 years or so of regulation. This seems to be T-Mobile NL’s point of view – no wonder, since its parent company is aiming for just this type of market structure (a duopoly).
Analysys currently looks into the options for replicating KPN’s fiber network to SLU locations. It comes as no surprise then that altnets cry foul. They want this market analyses to be finished first, before KPN would be allowed to continue the roll-out for its All-IP network which has already started. Also, legal support for closing of MDF locations in the first place is questioned.
In the meantime, KPN is extending its lead, heaving started work on the new network in 2004. It has fiber to many street cabinets in place, or at least empty ducts. It has VDSL trials going on and intends to launch VDSL service may 1, 2007.
The most striking elements:
KPN: different take on FTTH, compared to statements made to investors. They seem to take it seriously, all of a sudden.
ACT: conservative approach to MDF accesses. Personally I do support progress – i.e. allowing KPN to move on and build a better and cheaper network.
Bbned: states that KPN isn’t really investing at all and claims some of the proceeds of the planned real estate sales.
T-Mobile: copying its parent’s views.
3 Details from each operator or operator group
1. KPN stresses that it is no longer a monopolist in the local loop. There are fiber (Amsterdam, Lisse and Nuenen) and wireless (UMTS/HSDPA, WiMAX) alternatives.
2. Such alternatives should exempt KPN from providing SLU services in certain towns.
3. KPN will launch (activate) its VDSL network from May 1, 2007 and says that the date should not be dependent on OPTA’s upcoming ruling.
4. KPN disagrees with OPTA over the phasing-out period of MDF locations. OPTA is looking at a period of 5 years after, the same as the 5 year pay-back period for investments from altnets. KPN feels limited by this approach and is looking for a 2 year period between announcement of closure and closure itself.
5. KPN wants to get out of line-sharing obligations for a lack of demand. Full unbundling is much more popular.
My comments to this:
1. Obviously, KPN downplays those local loop alternatives when it communicates to investors and analysts. This way, KPN hurts its credibility.
2. Sounds fair, but misses the point. OPTA doesn’t seem to be willing to move to a US style model (duopoly).
3. I doubt whether OPTA will let KPN go ahead launching its VDSL network. I suppose OPTA will put its foot down on this one.
4. Nice try. A tough nut to crack fro OPTA. I think KPN suspects altnets may make small strategic investments at the last minute, thereby buying an extra 5 years of time before the MDF can be closed.
5. KPN seems to have a point, but if altnets desire the product, I do not see it being phased-out.
3.2 ACT (Association of Competitive Telecom Operators), i.e. bbned (Telecom Italia), BT, Colt, Orange (France Telecom), Priority (UPC/Liberty Global), Verizon and Versatel (Tele2):
1. MDF locations. ACT objects to he planned closure of MDF-locations. Keeping them open will not hinder the All-IP roll-out. In case there is a Full Alternative and KPN should want to close an MDF location and force out competitors, it must have moved out itself first at least 1 year earlier (in order to prevent that KPN changes its mind and decides to stay). Fiber to MDF locations should be depreciated over a period of 10-15 years.
2. SDF backhaul. It has not yet been proven that altnets can realistically roll-out an alternative network to street cabinets. OPTA unjustly doesn’t consider the case where SDF backhaul is found unrealistic, as ACT thinks. KPN being so far ahead in its build-out limits the chance for SDF backhaul being realistic. Even if SDF backhaul is realistic, KPN should still be forced to offer SDF backhaul as a wholesale service.
3. Subloop. Duplicasting the subloop is not realistic.
4. SLU. SDF-colocation is too expensive to be profitable because altnets have no real estate to sell, as KPN does, and because there are too few customers per location.
5. KPN should not be allowed to start offering retail services, because altnets would need 2 years after they can start offering SLU services. Time-to-market for new services should be equal for all parties. KPN is way ahead, having started work in 2004.
6. KPN should not be allowed to be be the sole wholesaler in the Netherlands.
7. Even if SLU, SDF-backhaul and WBA are realistic, they should still be regulated.
8. KPN should be more clear about the status of pilots and define an ending date in order to distinguish from a first roll-out.
The Telecom Italia subsidiary makes 2 general remarks: (1) It has no confidence in self-regulating markets because KPN proved an unreliable party in the past. (2) As part of ACT, bbned agrees with ACT’s position, except for one issue (virtual unbundling).
Bbned proposes a 15 year depreciation period.
KPN isn’t really investing at all; they are reallocating funds from MDF locations (which is where altnets have their operations) by selling buildings and reinvesting in the All-IP network (which is so far unregulated). Furthermore bbned argues altnets should share in the proceeds from the sale of those buildings, for at least 20% (being their collective market share).
Altnets face being behind considerably, compared to KPN’s build-out and demands a hault of at least 12 months before KPN can start offering VDSL services. Also, KPN should stop adding fiber to local loops. OPTA should have forced KPN to allow altnets to join in the digging work. KPN can put fiber through empty ducts to street cabinets, but it is not known how many street cabinte scan be connected this way without opening up the streets. KPN should not be allowed to sell any assets before the Full Alternative is finalised.
WBA should have a floor price, in order not to disincentive market participants to invest in infrastructure.
Should bbned plan to build-out a FTTC (fiber to the street cabinets), with adjacent street cabinets, it will take no less than 23 years.
The company is part of ACT and only adds some remarks.
3.6 Eurofiber (= Reggefiber):
The plans will remonopolise the DSL market into KPN’s hands. MDF access and LLU will end, whereas SDF access and SLU are unrealistic business cases (no economies of scale; SDF and SLU aren’t free KPN services, while they do not constitute wholesale services for altnets) and therefore no full alternative. WBA reduces altnets to simple resellers.
Questions include: can MDF locations be kept open? can VDSL and ADSL services be provided side by side?
Has no real comments and agrees with OPTA’s views.
Claims that the roll-out of All-IP should be haulted until there is a clear migration path. All market analyses should first be finalised. Damage has already been done.
Any LLU alternative should be cost-neutral to KPN, thereby transfering All-IP advantages to all market participants.
Those who wish to take wholesale services from KPN (thereby retreating to competition at the service level), should be given proper bitstream access and tariffs.
Vodafone agrees that the Openreach/equivalance case should be examined. As this may not be enough to create a level playing field, structural separation (of the access network) should also be looked into.
3.9 T-Mobile (Deutsche Telekom):
T-Mobile is a broadband competitor and claims that OPTA doesn’t provide a level playing field with altnets, which are protected by regulations. Therefore, OPTA should consider ending access obligations altogether.
Monday, December 11, 2006
Many references can be found floating around to the well respected expert Dr
Cioffi. He (rightly) projected a long time ago the potential of ADSL. He is now
quoted as having said that copper telephone wires have a Gbps potential. The
source is one article:
And specifically one headline: More bandwidth than fiber?
One of Dr.
Cioffi's presentations of DSM contains a slide that argues that copper actually
has more available bandwidth than fiber; it just needs to be better used. He
points out that a bundle of 50 Cat 3 twisted-pair wires (the kind that might be
used in the last segment of the phone network) has 10Gbps of available bandwidth
to distribute to the fifty homes at the end of those wires. By contrast, fiber
to the home has only 2.5Gbps to distribute to its homes.
But wait a minute:
what does Mr Cioffi say here? He compares a PON architecture of fiber (shared
medium for lets say 50 homes) with the aggregate potential bandwidth of 50
twisted wires point-2-point to the same homes. In the most ideal circumstances
VDSL2+ can achieve 100 Mbps up and 100 Mbps down to a home. 50 x 2 x 100 = 10 Gbps…to be compared with PON aggregated for these 50 homes. It is easy to spot what the spin has been. What is amazing how easily it has been adopted and
On the other side are specifically Verizon (FiOS) and Iliad (Paris). The case for FTTH is defended very well in this article. It's in Dutch, but the argument is straightforward: copper and coax and their upgrades simply will not do in a few years time. Of note is a quote from Eelco Blok of KPN:
All-IP is a necessary step toward a full fiber network.
In the Netherlands Dick Wessels is a force to be reckoned with. Through his ventures (Volker Wessels, Reggeborgh and Reggefiber) he controls a large part of the (muni)fiber efforts in the country. For Dutch readers, this series of articles is worth a read.
The KPN quote above is remarkable when contrasted to KPN's ususal drone, exemplified at the latest quarterly results by referring to the 'net line loss' metric (PSTN/ISDN line loss - VoIP adds - 'ADSL only' adds; the latter not being published independently; KPN are right now trying to sort of win-back such subs by promoting ADSL to mobile-only subs). Net line loss improved to 140k (from 165k in Q2). KPN was quick to point out that line loss therefore had bottomed. However, with all the munifiber coming to market in 2007 this seems unlikely. Also, last week OPTA (regulator) published 9 responses to its Position Paper, itself a response to KPN All-IP network proposal. KPN can be quoted from their responses:
UMTS, HSDPA and WiMAX are import developments related to increasing local loop competition. Private and public initiatives around munifiber, as in Amsterdam, Lisse and Nuenen, also contribute to increasing local loop competition.
In short, when talking to investors KPN downplays the advent of FTTH (munifiber), but when talking to OPTA they are more open and do appear to fear the munifiber threat. Also, simply taking over Reggefiber at some point will be made impossible; having acquired many small ISPs, KPN's market share is simply to high.
I will try to cover the responses on the OPTA site this week, as they are in Dutch only.
Friday, December 08, 2006
Hutch 3G UK got a lot of attention (justly) for its new X-series, which uses Orb Networks' technology. Vodafone Germany earlier teamed with Orb for 'Vodafone-Mein PC'.
Personally, I feel this is a pretty useful application, just like video/TV over wireless (with Sling, preferably). It seems an extension of photo/video sharing in the PC-world, but without the limitations (not just the stuff that you uploaded to Flickr or any other site - and mobile!).
Tariffing however could prove a limitation.
UPDATE: Ann Willey of Orb Networks mails me the following:
"Just wanted people to know that Orb Networks is the architect and provider of technology that makes Orange's Mon PC possible. We worked with Nokia and Orange to offer the new service."
What happened earlier? The review ended up a big win for DraftFCB, a newly formed shop at the plagued Interpublic group. The AdAge site had two articles describing how the deal happened. (It's a paid site, but I just happened to have saved them over here.)
The hookup is sure to go down as one of the most talked-about account shifts in
ad history, up there with IBM's 1994 consolidation at Ogilvy, a move that saw
Big Blue jettison 80 other shops.
Chemistry between Wal-Mart's Julie Roehm and DraftFCB's Howard Draft was instrumental to bringing the deal to DraftFCB. (Never mind Howard's Aston Martin didn't want to cooperate in delivering a thrilling experience to Julie.) Now Ms. Roehm is fired and Wal-Mart is reopening the review. DraftFCB may not participate (other Interpublic shops are allowed, as is Carat).
I wonder what could have happened. Two quotes from the articles:
"And we spent a lot of time with Howard Draft, which is educational and
Ad Age: You mentioned before that Howard Draft is, among other things,
entertaining. I hear you got to take a ride in his Aston Martin. Can you tell me
about that? Ms. Roehm: He does have an Aston Martin, and I got to go down and
sit in it because I'm a car nut. We were out and he asked if I wanted to drive
it around the block. I said, "Wow, could I?" So I got in and it didn't start. He
had to have it towed. Ad Age: You obviously didn't hold the engine problem
against him. Ms. Roehm: I can assure you I had nothing to do with it.
Thursday, December 07, 2006
The deal includes search and sponsored search, video technology (for a UGC portal) and communications (a customised Gmail version, supplying @sky.com addresses). These services are available to Sky broadband subs.
My takes on this:
First, apparently there are warm relations between Google and News Corp, opening the door to further expansion.
- Google could be the preferred partner for similar deals at DirecTV, Sky Italia and others, once they start offering broadband.
- More News Corp properties could be included going forward, most notably offline properties. As Google is already testing ad serving to magazines and newspapers, the News Corp print subsidiaries could come aboard.
- Interactive TV could also be included.
- The press release even mentions mobile advertising as a possibility. Will Sky copy what NTL did, acquiring Virgin UK, or what Comcast did, partnering with Sprint? Sky recently successfully ended a mobile TV trial with Qualcomm (MediaFLO), so there is another option for a deal. Currently, Sky already supplies content (including Premier League) to Vodafone UK.
- Also, Sky is looking into broadband expansion into Ireland.
Second, it reminds me of Yahoo!'s access deals with Verizon, AT&T, Rogers and BT (except of course, Yahoo! aggregates a whole lot of content with it). Google and Yahoo! are clearly fighting to win partners. Of interest is that Vodafone UK works with both Google (sponsored search) and Yahoo! (display ads), as does eBay (Yahoo! in the US, Google elsewhere). It comes as somewhat of a surprise to me that News Corp doesn't join this divide & conquer strategy.
Wednesday, December 06, 2006
It looks like a small step to include on-net calls for citizens. It will be interesting to see how this develops.
Tuesday, December 05, 2006
This appeared to be KPN's strategy of its Het Net subbrand. It was exposed at a TV show covering consumer products and services. It's a low-cost brand, and therefore doesn't qualify for excellent customer service, as does XS4ALL.
The InternetPlusBellen double play causes a flurry of complaints, but KPN has no intention of dropping the fee. They are extending the staffing though.
Monday, December 04, 2006
Owners Warburg and Cinven plan to merge Multikabel with Casema and Kabelcom to form the Dutch #2 MSO after UPC.
At first sight, the price rise is modest: the basic offering rises by 30 cents (2%) to 15.75 EUR/mo. Compare that to Comcast, which is preparing traditional price rises of up to 6% (at much higher levels too). However, Multikabel takes out the digital channels, for which subs now need to pay a separate fee of 1.95 EUR/mo. This adds up to a 15% rise!
One way to look at it is to say this is a way of rebalancing tariffs. PTTs moved to lower per-minute charges, only to raise subscriptions. And recently Hutch launched the X-Series, pursuading subs to take on an extra fee in exchange for 'unlimited' VoIP calls (and lots more).
My shortlist out of this longlist:
BridgePort: convergence software
comScore: internet analytics
IceMobile: mobile entertainment
MobiTV: mobile TV aggregator
Mozilla Corp: Firefox browser
Ruckus Wireless: in-home WiFi for home-networking
Sling Media: place-shifting technology
Technorati: blog search and analytics
Thursday, November 30, 2006
- Smart strategy, replicating E-Plus' (KPN) success in Germany with its Ay Yildiz subbrand for Turkish Germans.
- A valid MVNO strategy, avoiding conflicts of interest by segmenting the market and using partner networks for cheap tariffs.
Wednesday, November 29, 2006
Also on Thrillist.com is Neighboroo.com, another Google Maps mash-up. Check out your neighborhood by ZIP code - US only.
Tuesday, November 28, 2006
Wireless is about voice and SMS, but BB/internet/TV/etc. could be a nice add-on for those shiny 3G/4G networks. Demand will not be exploding (to say the least), so I believe operators are dumb trying to limit access (thus introducing the net neutrality issue to the wireless space).
Here goes my argument:
1. Berggi (10 $/mo) enables any phone to receive e-mail and IM. Now Presto and HP work to have e-mail and photos delivered to a printer - no need for a PC (also 10 $/mo). Niche apps, but nice.
2. Still, the wireless world shows quite a bit more inclination to innovation than the fixed world:
- Advertising: opt-in in exchange for lower fees (Vodafone/Yahoo!) or have a free handset and free calls (Blyk; also Google's vision of the future).
- MVNOs: I haven't given up on them, as long as there is a good deal in place (Nextel/Boost).
- Homezones (FMS): Vodafone (At Home) and T-Mobile are expanding to many countries.
- Other tariffing options: Family plans; free on-net calls; buckets; roll-over of unused minutes.
- Dual-mode handsets and BB (FMC): most action is from Voda and TMO again.
- Banking/payments: Rabobank is entering (on the Orange NL network). They have a solid reputation in fixed online banking - they may be able to make it work in the wireless space. Cingular has plans for 2007. Also, BouygTel is working with SNCF and RATP for train access in the Paris region.
- Online access: MNOs are trying to hang on to their walled gardens, but social networking (Vodafone) and video sharing (Verizon/YouTube) are attracting interest. The big test is 3G UK's X-Series; I suppose the tariffing will be OK, but how about the fair use policy?!? If it is set not generously enough, users of the Sling TV service (place-shifted TV) will eat through their limit all too soon. Will Hutch be able to do the rebalancing act?
3. Unfortunately, the latter point introduces the net neutrality issue in the wireless world:
- Google complains about operators trying to prevent downloads of Google Mobile Maps.
- Nokia will launch P2P/VoIP blocking software next year.
- Again, what will be the X-Series details from Hutch?
Monday, November 20, 2006
So now we have one or two acquisitions in the Web 2.0 domain, a large scale alliance with seven newspaper groups and an internal memo, leaked Microsoft/Ray Ozzie style.
What could 'Focus the vision' really mean?
- Exit payments and auctions (and ecommerce, comparison shopping) and partner with eBay, which partially has happened. Could Yahoo! Messenger (with Voice) be folded into Skype?
- More generally, follow Jack Welch' 'fix, sell or close' in addition to Yahoo!'s own 'build, buy or partner' adage.
- Sell the 40% Alibaba stake and the 30% Yahoo! Japan stake.
- Exit certain other countries, presumably in Europe.
- End any content production efforts. Get rid of Lloyd Braun.
My take on this is twofold:
- I see no fundamental problem in acquiring non-overlapping entities, especially as in the case of Bix.com, where its Mike Speiser is made VP for all community-oriented sites. The only problem would be that it could create too much overhead (see Vodafone's dissynergies after acquiring too many country operations). This makes Mr. Garlinghouse's job cutting proposal seem very plausible. At Q3, the TTM revenue per employee was $400k at Yahoo! and $678 at Google.
- By not making acquisitions, Yahoo! risks losing market share, because the web is expanding much faster than any company can match from organic growth alone. Both Yahoo! Q3 and Google's acquisition of YouTube underscore this point.
Friday, November 17, 2006
Possible snags: limited handset range, a fair use policy and most of all: pricing. Will 3G be able to do the rebalancing act?
Is this 3G's final assault of the market?
Is this the way for Skype to get its mojo back?
Wednesday, November 15, 2006
Many will say yes, I suspect, referring to things like:
- WiFi, muniwifi, WiMAX, xMax, 3G
- IMS, A-IMS
- Roaming: T-Mobile, Boingo, The Cloud
- Sharing: FON, Free
- Dual-mode handsets (cellular/WiFi), WiFi handsets (like Sony's Mylo).
- Clients/services: Skype for Mobile, iSkoot, Cicero, Truphone, Nimbuzz, Jajah.
Of course, there are similarities between fixed and mobile VoIP:
- VoIP needs an always-on BB connection (but not strictly, see KPN's Slim or VoxLib).
- Traditional voice revenues are at risk.
- VoIP delivers cost savings and potentially better voice quality.
- Free on-net and cheap off-net calls.
I believe there are some major differences between the mobile and fixed worlds, even if they can be dealt with:
- Wireless licenses and spectrum are scarce. Perhaps less so when analogue TV spectrum becomes available. Also, when operators like 3 and Xfera enter the market, not te mention WiMAX and xMax.
- VoIP blocking: there is no net neutrality debate in wireless (yet). T-Mobile however backtracked.
- People use their handset differently from how they use a PC. Demand for things like mobile internet and mobile TV is unproven/low. Downloading clients is more of a hassle. Not when they come pre-installed.
- Fixed BB is cheap because of competition, most notably infrastructure-based competition. There is no such thing in the wireless space.
Continuing on the last point, it would be my understanding that mobile operators have a chance of defusing the wVoIP threat slowly. They can make an offer to their customers saying: ditch your voice bill and take this data subscription! As long as it is priced at around the present ARPU for voice (+ messaging) + data.
PTTs have done this before, when there was no such thing as BB: rebalancing tariffs away from per-minute charges and toward monthly bills. The differences between mobile and fixed makes it harder for them to rebalance the VoIP-threat away than it should be for wireless operators.
Amazon.com's sales growth was over 24% and has been accelerating for the last four quarters. Few companies are able to show this kind of growth and manage to be declared #1 in Customer Service by the NRF.
All this is indicative of one import thing: the company's superior infrastructure (from technology to distribution and people). As has been commented on a lot - it has such quality and redundancy as to allow Amazon to supply open access.
Are you in need of computing power for your new virtual store (or any other kind of internet start-up)? Hire Amazon. Do you need cheap storage? Hire Amazon. Do you want your virtual store built? Hire Amazon. Do you want to outsource fulfillment? Hire Amazon.
What does all that mean to Amazon? Jeff Bezos has been clear about this - read the BusinessWeek Online. He's talking leverage and tapping a new revenue stream, however small it may yet be. The article also mentioned the blessing of building an ecosystem, an 'army of allies'.
But I see one more possibility, as others have hinted at before: splitting the company along the lines of structural separation in telecoms or utilities. That would make Amazon Web Services the absolute leader in infrastructure and a focussed high-margin play. Amazon Earth's Biggest Selection would be the first virtual virtual store, a clear high-volume business.
That in turn could settle the market's apparent incomprehension of Jeff Bezos' long-term vision.
Wednesday, November 08, 2006
KPN is building an All-IP NGN, effectively making LLU obsolete. Altnets now have a choice: go with KPN wholesale services or invest in the (even shorter) local loop through SLU at the street cabinet level. The OPTA regulatory body approved KPN's plans largely and called for comments through November 7. By late December it wants to publish final rulemakings.
Bbned targets a nationwide local network existing of FTTH (munifiber) and KPN wholesale or SLU services.
Implications of bbned's move:
- Commitment of TI to the Netherlands, in spite of the market's size and competitiveness.
- Bbned being involved in numerous munifiber projects effectively makes this a copy of sorts of Iliad/Free cooperating with the French (Paris) government. From a bandwidth point of view, this could even put bbned at the forefront.
- It still remains to be seen what the other altnets decide to do (Tele2/Versatel, Orange/FT).
- Resellers like Scarlet could join in. Or would anybody be interested in copying the Carphone Warehouse strategy?
Monday, November 06, 2006
That supports the business case of running a mobile operator focusing on core competencies: voice, SMS, network and indoor coverage, voice quality etc.
Tuesday, October 31, 2006
Anyway, most striking I found the ease at which takeovers are regarded a form of SACs (listen to the call). Without Telfort, all these ISPs and ICT providers that KPN has been hoovering up, growth was squarely negative, instead of +3.7%. Also, there is no turning point yet in the development of the number of accesses.
As KPN managed to put an end to LLU and force competitors (they have until November 7) to rethink their strategy (turn reseller or invest in FTTC (as in 28k street cabinets) + SLU), munifiber is simply not talked about. Not a word about Citynet or any other project. When I spoke to the IR people recently, they quickly turned to Appingedam - as if that case is representative.
Thursday, October 26, 2006
It looks like cable open access is many years away. Still, leveling the playing field sounds fair.
Below, I have the translation of the bills that were passed (thanks to Citynet's Dirk van der Woude).
Questions raised include:
- How will the EU respond? Is SMP relevant at all?
- If line rental and services are to be separated, does open access concern (broadcast) TV only, or will it extend to (digital TV), BB and voice?
- Will OPTA (or a different regulator?) go so far leveling the playing field demanding infrastructure-based competition, i.e. competitors installing gear at cable headends? Is this practical at all, from a technology point of view?
- How will any costs of opening up the networks be divided among the MSO and the alternative service provider?
- Will this allow UPC (Liberty Global) and Casema/Kabelcom/Multikabel (Warburg, Cinven) to merge, creating a near-nationwide network, further leveling the playing field?
- How will Warburg and Cinven respond? Could the Kablecom takeover (from Essent) be in danger?
- Longer term, is there room for three competing physical layers, now that munifiber is coming? Could it spur structural separation, all players using a single physical layer (owned by some state-owned body)?
Motion 1- Considering that the telecom sector more and more has strategies towards vertical integration of networks and services
- considering that this integration can hinder free competition between service providers
- considering that existing competion end telecom laws offer insufficient means to resist these competion barriers
- considering that government as well as parliament are in favour of a standing charge model (as proposed in the earlier accepted motion of MP Atsma of 2004)
- invites the government to propose within a year to parliament for changes in the Telecommunication law, by which the markets for infrastructure and services will strictly be divided by the introduction of a standing charge model as well as the prohibition of the conditional sale of network and services.
On the above motion the new Trade minister Wijn has said that it has all of his heart.
- Considering that developments in the telecom sector have been rapid,
- considering that there hardly is any difference anymore between telco and cable networks, form the perspectives of technology as well as use
- considering that free access for all service providers furthers innovation and ICT in the Netherlands
- invites the government to propose within a year to parliament for a change in the Telecommunication Law, leading to mandatory, open, non discriminatory access to all networks for all service providers.
Of this motion the new minister said that it might find problems in Brussels. He did not say that he disagreed with the gest of it.
Also: Wolters put its own educational unit up for sale last month and Thomson reports Q3 results today. Riverdeep is rumoured to bid for Houghton Mifflin.
Thursday, October 19, 2006
No word on Skype for Mobile.
What is there on Skype (consolidated from 05Q4):
- 135.9m registered subs in >200 countries, + 23m = +20% qoq.
- Revenues $50.0m, +13% qoq. Of this, 84% is from non-US v. 86% in the previous quarter.
- The 2006 revenue target has been lowered to $195m (originally $200m).
- Break-even is expected during 2007, "... while making significant investments to continue to build out the ecosystem and expand the product offering. (...) We're looking at a variety of incremental revenue streams ..."
- Sky-to-Skype minutes: 6.6 bn or -8% qoq ("summer seasonal impact") and +77% yoy.
- SkypeOut minutes: 1.1 bn, +32% qoq and +235% yoy. Partly on the back of free promos in the US, Canada and France.
- The ecosystem comprises 3500 developers and 400 partners, including NetGear, Belkin and Sony (the cool new Mylo) for hotspot calling.
- Skype for Pocket PC was downloaded 5m times.
- Trials are ongoing of Skype Me buttons on eBay en Kijiji sites. "We see great promise. (...) we see indications of a higher conversion rate when there are Skype buttons that are used."
- Skype fuels PayPal adoption.
- Skype is part of the US deal with Yahoo! and the non-US deal with Google for click-to-call. Trials to start early 2007.
- The 2007 guidance will be updated in January, depending on the results of several inititatives, including "Skype momentum to the fourth quarter."
UPDATE: lowering the revenue target will likely reduce the $1.5 bn earn-out (based on 2008 targets)
Tuesday, October 17, 2006
Last week KPN published SDF access tariffs, in repsonse to OPTA's positionpaper on KPN's All-IP network proposal. This space issue is still not resolved, though. OPTA's ruling is due late December.
KPN today tell me by mail:
"Het kan inderdaad zo zijn dat sommige kasten niet groot genoeg zijn, echter als de unbundlers vroegtijdig aangeven om hierin ook te willen investeren kan dit gelijk met KPN worden meegenomen."
Which reads like:
"It can indeed be the case that some street cabinets are not large enough, however as the unbundlers indicate early to also want to invest, this can be incorporated by KPN."
Still not resolved, then. How many street cabinets does this concern? Will KPN have to pay up, or would the costs be shared? etc.
Monday, October 16, 2006
- Consumers: DIY, user-generated content, web applications.
- Businesses: focus on core-business, (outsource) ICT-services.
Hence telecoms operators like KPN and BT trying to focus on a low cost high-bandwidth network for consumers and at the same time trying to deliver ICT services to corporations.
No wonder KPN would like to buy an asset like Getronics. From a quality point of view, other candidates may make more sense, e.g. LogicaCMG (which seems to be struggling building international coverage) or Atos Origin.
Thursday, October 12, 2006
Wednesday, October 11, 2006
It makes investment decisions very hard.
- Fixed: Is FTTH really the best, or can FTTN + DSL beat it? What about HFC, BPL and BiG? Is it wise to make big bets at all right now (FiOS), or is it better to be be slow?
- Wireless: Will any wireless technology ever be able to compete? How about xMax? Is it wise to make big bets now, or try to be slow and try all technologies (Sprint)?
- DSL: ECI Telecom will lead a consortium aiming for higher speeds, using dynamic spectrum management (DSM). Beyond VDSL2, mind you! John Cioffi argues copper has more available bandwidth than fiber.
- Cable: a comparable view, saying cable plant has plenty of bandwidth. However, with DOCSIS 3.0 still in development and DSL racing beyond VDSL2, this seems a tough point.
- BPL: Fiercewifi argues perhaps the time has come for a breakthrough. We have to look out for the Microsoft EMEA event in Munich in November to see a Motorola demo.
- TDtv: The British wireless incumbents will do a trial of IPWireless' TDtv solution, using existing spectrum. Jointly, that is, a smart decision. However, DVB-H seems to be the winner so far in Europe, and there is plenty of choice; like:
- MediaFLO: Sprint Nextel has a trial going on. Why not? They have CDMA-EV DO-Rev A, iDEN and (to be launched) WiMAX, so why not add a fourth network (not counting the possibility of yet another from the SpectrumCo/cable joint-venture. This would be something like: we try to optimize the utilization rate of our towers.
- Picocells: T-Mobile will use ip.access' nanoGSM gear for in-building coverage.
- Ruckus Wireless: Belgacom will use this company's WiFi solution for in-home networking, to support the Belgacom TV (IPTV) product. Ruckus just received funding from T-Online Ventures (a T-Mobile sister in the DT kamp) and Motorola.
Friday, October 06, 2006
Wednesday, October 04, 2006
I have a hard time understanding the new vybemobile offering, though, for three reasons:
- It focuses on the youth market, but so do Simyo and Base, to an extent. Specifically, it targets music lovers, but so does Viva Mobile (with MTV).
- Vybemobile is a venture with Universal Music. That makes it appear limited. What about Warner Music, EMI and Sony BMG content? Or will E-Plus add more brand? That would leave us no alternative but to buy 4 new handsets! Again, isn't Viva enough? Or maybe the service should be a licensing product, the way the new Mobile ESPN will work.
- KPN wants to get out of subsidizing handsets, but this service seems to need it.
The EC has not yet formally approved the venture, but Citynet regards a court ruling supportive. Moreover, they made sure to follow the European Market Economy Investors Principle. Citynet also refers to other state-owned firms providing BB access (e.g. MSO Zeelandnet).
- Owner:GNA (Glasvezelnet Amsterdam), which is in turn 33% each owned by the city, 5 housing corporations and several investors (ING and Reggefiber, which we also know as Lijbrandt Telecom owners).
- The network will be operated by bbned (= Telecom Italia), which rents the network from GNA, on a wholesale basis.
- There will be many service providers.
Some comments concentrate on delays in closing the old network, others report KPN's initial positive stance.
- Positive for KPN is OPTA's acknowledgement of the rationale of the new All-IP network. It may be built and KPN will be allowed to close down 1100 COs.
- Positive for altnets is OPTA's commitment to infrastructure-based competition on the telco network. But who would have expected an American style duopoly at this point?
- Something that seems to have gone unnoticed is OPTA's plan to study the British model (equivalence, Openreach). This study will be conducted shortly and will be incorporated in the final ruling (late December).
- OPTA seems to urge altnets (and others?) to cooperate. Enter speculation on Australian style initiatives.
- The final ruling could have major impact across Europe.
UPDATE: KPN made an English translation of the OPTA paper. Mail me for a copy.
Tuesday, October 03, 2006
First, the facts from the Management Summary and the paper itself:
- KPN must be allowed to build the network and close COs as planned, but negative effects on competitors must averted.
- Infrastructure-based competition is OPTA's primary goal. Only wheneven it is impossible will OPTA resort to services-based competition.
- OPTA calls upon altnets to define alternative strategies.
- KPN's planned exit of COs (and thus MDF access and the sale thereof) must be accompanied by a migration strategy for LLU operators. LLU is to be replaced by a new form of infrastructure-based competition. OPTA aims at altnets rolling out their own FTTN network (from COs to street cabinets, i.e. KPN's Metro Access Network, which in fact is for large part completed), facilitated by KPN. OPTA sees a range of possibilities: from renting capacity on this MAN (SDF backhaul) to sharing the trenches. However, OPTA also recognizes that probably only KPN has sufficient scale for the latter investment.
- Closure of COs will be restricted in order to allow LLU operators to recoup their investments. OPTA sets this period at 5 years. In addition, the timeframe would be such that KPN needs to notify the market of closure of each CO 2-2.5 years ahead, after which LLU operators have 1-1.5 years to migrate.
- KPN is held to provide service-based competition for areas that are not yet covered by DSL and that it plans to add.
- OPTA will examine the British model (equivalence, Openreach), especially should KPN and altnets be unable to work out a model on their own.
OPTA will formulate a full alternative to current MDF access. It will likely include a choice from these options:
- Access to street cabinets.
- Conditions for the phasing out of MDF access.
- A regulated wholesale broadband product form KPN wherever it offers no SDF backhaul.
- Dark fiber access or regulated SDF backhaul, plus co-location at both street cabinets and MCLs (higher up in the network than current MDF locations).
KPN's All-IP plans include reducing the number of COs from 1350 to 200, roll-out fiber to 28k street cabintes and deploy DSL (including VDSL2) in the last mile. Build-out is to take from 2006 through 2010. Selling-off real estate should furnish EUR 1 bn or at least half the cost. Some 8k jobs (of 20k) will be lost.Opex savings are targeted at 850m EUR/yr from 2009.
- OPTA opens a consultation phase, lasting 4 weeks. It could potentially be a long process, but roll-out by KPN should not be frustrated too much. At the same time, KPN is very smart by having a large part of the work already done. By the way, this means that responses are due October 31, the day KPN reports Q3 results. OPTA aims to have new regulation ready by late December 2006.
- OPTA seems to call for action from altnets. The regulator is quite explicit about the end of LLU. Maybe they hope for a Free/Iliad or A9 (Australia) style initiative. So far, we have seen little action, most notably all of them allowing KPN to acquire a string of ISPs (OK, LLU investments are at risk, but should be recoverable). Why is it so hard for those (cash-strapped) competitors to work together, possibly even with municipalities?
- A limited negative for KPN is a delay in the planned closure and sale of COs.
- OPTA's commitment to altnets and infrastructure-based competition is positive for competitors, but should not surprise a soul.
- Possibilities for co-location at street cabinets remains unclear. OPTA seems unimpressed about any problems here (SDF-co-location). KPN places its NG-DSLAMs at these street cabinets to form MSANs (multi-service access nodes).
Monday, October 02, 2006
- KPN is building its All-IP Network (FTTN + VDSL2) and the tiny problem of limited space in street cabinets (too small for colocating LLU-players).
- KPN acquiring a host of ISPs, lastly Tiscali NL.
- Warburg Pincus and Cinven trying to merge Casema, Kabelcom and Multikabel.
- KPN's failed attempt of building a national FTTH-network together with cablecos and the latter's belief in the future of HFC-networks.
Which are the possible outcomes and OPTA's range of choice?
- Adopt KPN's choice: just resellers, no LLU, on the All-IP network.
- Force KPN to add a street cabinet at each location: a second one for colocation. I'm not sure this could work.
- Structural separation, to any degree (ranging from Telecom Italia's new strategy (?) or BT's Openreach to Portugal's condition for the PT acquisition by Sonaecom).
Judging from what happened in Germany (no regulatory holiday for DT's FTTN-network), an American-style market (duopoly) seems unlikely. Besides, OPTA is too much in the habit of slamming KPN. If structural separation is proposed, it will shake European markets. So, OPTA must be studying on some kind of 'polder model'.
Finally, there is still a chance for a superior national FTTH-network, either from KPN or from any combination of players (e.g. Australian-style), but that will be hard for OPTA to have a word in.
Thursday, September 28, 2006
I'm not sure if a similiar service of the online Wall Street Journal is common knowledge. Select a word and right-mouseclick it, and you'll see related WSJ-articles.
Tuesday, September 26, 2006
Monday, September 25, 2006
Shared services: operators in India call for the establishment of a single "entity to lay the most modern and scaleable infrastructure and allow other operators to ride on that infrastructure".
A comparable idea (however different) is coming from BT: a BT Consultancy to help other operators build an all-IP NGN, to put some leverage on BT's 21CN efforts.
Telco/B2B consolidation: how about KPN + Wolters Kluwer? KPN is launching KlasseTV (Classroom TV) consisting of video clips supporting K-12 education.
- eBay: alliances with both Yahoo! (US) and Google (non-US) for paid search etc.
- CurrentTV: Google provides statistics and Al Gore is a Google advisor. However, the video deal went to Yahoo!.
- MySpace: Google for ads, eBay is rumoured to be partner for ecommerce and payments.
- Apple: Google is the search engine in the Safari browser, Eric Schmidt is on the Apple board. So, it looks like it will be Yahoo!, not Google, to win the video deal.
Tuesday, September 19, 2006
- Telecom: wholesale services, structural separation, network services. See BT Openreach or perhaps Telecom Italia. Also, OPTA is considering how the new All-IP network that KPN plans is best opened to the competition. Any outcome is possible: resellers only, double street cabinets, structural separation or an Australia style joint effort from altnets aimed at a new FTTN (KPN style) or FTTH network (Verizon or Iliad style).
- Internet: see my previous post on Amazon.com. And to take this one step further: what could Google do with its massive server network? EBay is doing a little by providing infrastructure to the e-Media Exchange initiative from the advertising community for buying media.
- Media: Switzerland Inc was suggested for the newspaper industry. Also, in this artcle a Publishing Cooperative is suggested for society publishers.
Wholesale services are a growing activity (even at a telco like BT) or a new source of revenue, albeit at a relatively low margin.
- Fulfillment by Amazon (handling fee 0.50 $/item + 0.40 $/pound + storage fee 0.45 $/cubic foot/mo)
- WebStore by Amazon (commission 7% + 60 $/mo)
From the release:
Fulfillment by Amazon frees online sellers from the time and money required to store, pick, pack, ship, and provide customer service for the products they sell online. Businesses simply send their products to an Amazon fulfillment center where Amazon stores and sends those products to customers who order them on Amazon.com or the business's WebStore. Amazon will also manage post-order customer service such as customer returns and refunds for businesses that use Fulfillment by Amazon. WebStore by Amazon allows businesses to create their own privately branded e-commerce websites using Amazon technology. Businesses can choose from a variety of website layout options and can customize their sites using their own photos and branding.
- India has finally shortlisted a number of frequency bands for WiMAX. This could bring deployments closer in a country that is specifically suited for the technology (low fixed line penetration, large rural areas, high economic growth).
- The Bill and Melissa Gates Foundation donated $1.1m to a new PLoS journal (PLoS Neglected Tropical Diseases). That is backing from a deep pocketed source.
Monday, September 18, 2006
So, no telco, no city, but a grass roots start-up.
The interesting parts of the story:
- Bit rates are very high, at an average of 94 Mbps.
- 28 Homes are connected and the target is 2500.
- The organisation claims its success depends less on scale than on concentration and social cohesion of the participants. There will be no call-centers but instead the inhabitants will take care of issues themselves. Full roll-out depends on at least 50% taking part.
- The network is open for service providers.
- It piggybacks on the TeleMANN network of Nijmegen's Radboud University, supplying fiber connections to students in a nearby area, which buried some extra ducts.
- At 44% KPN is not yet at regulatory risk, but OPTA will be alerted. KPN is quietly trying to buy a DSL monopoly.
- The price seems low, at 5.1 x EBITDA 2006 v. 8.1 for Tiscali as a whole. KPN pays EUR 255m = 21% of the total EV (which obviusly includes a takeover premium) for 13% of the total revenues and 36% of the total EBITDA. On the other hand, Tiscali has no standalone future, so KPN might have waited a little longer. And the Netherlands is among the most mature of its operations (LLU coverage 60% v. 18% in the UK and 40% in Italy).
- KPN outsmarts France Telecom (which should be strengthening its new Orange operations), Telecom Italia (which should be adding a retail operation to bbned, which would not be for sale anymore, but everything is uncertain now in Italy) and Tele2 (which should not stop adding scale, after the Versatel acquisition). Of course, the Netherlands is a small place for those big guys, but they should not allow KPN to make this kind of deals.
- Tiscali will update its Business Plan during the week of October 9. They seem committed to the UK and Italy. Consolidation is continuing.
Thursday, September 14, 2006
No wait, a full merger of BT Global and Reed Elsevier!
- I suppose up to some point it is opportunistic, taking advantage of still high margins at TIM and structurally much higher valuations of B2C media. Now is the time to sell (TIM) and to become a media company.
- At the same time, separating networks from services would be sort of visionary and could make the company future proof. We are talking natural monopolies (see Martin Geddes) and MVNO/reseller opportunities, as I noted before (see also Dean Bubley).
- And if that doen't work, there is always extortion (thanks Keith). It works in the US, but it will be hard in Europe (see Germany).
To end, some speculation:
- Telecom Italia Media is too small. Are takeovers on the cards? Endemol?
- There are many takeover candidates for the international activities (France, Germany, Netherlands): Tiscali, AOL, Iliad, Neuf Cegetel, Arcor, Versatel Germany, etc.
- To make the altnets in France, Germany and the Netherlands future-proof, more action is required. LLU investments are at risk (for the plain reason that street cabinets, contrary to COs, simply do not offer physical space for DSLAMs). Are fiber plans a la Iliad (or a la Telecom Italia's subsidiary bbned, which operates munifiber in the Netherlands as a wholesaler) on the cards?
- Will TIM consider WiMAX (or any similar technology like WiBro, Samsung 4G, UMTS TDD or Flash-OFDM) to become a full-service operator?
Tuesday, September 12, 2006
The trouble is that Telecom Italia say that the move is triggered by regulatory issues only and for some reason they stress that the focus will be on broadband and media. Also, time-to-market should improve and the group plans to expand internationally. No wonder that press reports assume that selling TIM and TIM Brasil is really what it is all about. That would help the net debt position and Pirelli.
- Separating fixed and mobile: a clear u-turn. I find it hard to believe that convergence products would be a hard sell, but I do realize that it is a marketing tool only. Going forward, the issue could be resolved by becoming each other's reseller. TIM could even become a full-service provider once WiMAX (or another 4G technology) arrives.
- Separating wholesale and retail (structural separation to a degree): openly following BT. A smart move, which could have more following. It stops telcos from defying the stupid network inevitability. Focus on broadband (ie being a pipe) is putting it a different way. Telecom Italia however is set to lose market share (at this point BT is a very different story).
- Focus on media: too much credit to a tiny unit (La7, MTV, DTT). This too would be a u-turn, as most telcos have given up on telecom/media convergence (Telefonica selling Endemol, etc). Also, there is limited value in reselling content with small margins. Or would Telecom Italia now be a candidate for buying Endemol and the like?
- Expand internationally: not without risks. In a way, this is the mirror image of being an incumbent. If the latter is a difficult thing, this could be a good thing. However, with PTTs moving toward FTTN, LLU investments are at risk. Also, BB markets are smaller and less profitable than mobile markets. Consolidation could help. I assume that bbned (Netherlands) is no longer for sale and now needs a retail operation. Telecom Italia could be a consolidator (AOL units, Tiscali, etc).
- Selling TIM and/or TIM Brasil makes little sense to me. Mobile markets suffer from price cuts, but at least there is room for volume growth.
Monday, September 11, 2006
His reasoning goes something like this: if newspapers want to recoup their lost revenue, they need to succeed online. To do that, they need network economics: the network effect and scale economics. Establishing a 'Switzerland Inc.' could help them attain that.
Other companies mentioned are ActiveGrid, Ingres, PI Corp, Zimbra and Lok Technology. The whole 'Cheap Revolution' is based on open-source software. Profit margins are often below 10%.
The article talks about the big waves in the computer business: mainframes, minicomputers, PCs/servers and now the cheap stuff.
Looking at it from my point of view, I would conclude that costs will go down drastically for users like Google. Enablers will benefit, as they become the new standard. They could include Amazon.com. Obviously, the future is less bright for traditional hardware and software companies.
BiG: Nethercomm claims field trials next year, but designated partners (utilities) deny. 6 Gbps brought to you for just $200 per household.
xMax: ZDNet UK witnessed a succesful trial in Florida. 4 Mbps at an 18 mile distance, supposedly NLOS too, and at tiny power usage.