Monday, August 07, 2006

WIRELESS LICENSES://AWS auction to start August 9

Off to a long holiday. I will mainly miss out on this:
  • Spectrum: the start of the AWS auction by the FCC (August 9). And who knows what will come out of DirecTV and EchoStar teaming up for the auction. What will happen to Clearwire? Related: Sprint's technology choice for 4G in the 2.5 GHz band (also this month). It doesn't look good for Flarion (Qualcomm) and IPWireless. With Sprint speeding up EV-DO Rev A, will they still need WiMAX or any other 4G technology?
  • Earnings: see the calendar on the right (Disney, DT, WPP).
  • Corporate: there will be more clarity over PT's future.

Friday, August 04, 2006

FTTH://Lijbrandt Telecom scores 62% penetration rate

Lijbrandt Telecom proves a very succesful privately owned FTTH company in the Netherlands. It was established by the Wessels family of construction company Volker Wessels Stevin, through their Reggeborgh Beheer investment vehicle. Direct ownership of Lijbrandt is at Reggefiber and CEO Martien Koster.

After having started in the town of Hillegom, Lisse recently approved their opening up the pavements/sidewalks. Larger plans emerged when Amino announced Lijbrandt's order for STBs. Now Planet Multimedia has an article, which includes a short interview with Koster.

In Hillegom, the network passes 90%, or 7400 homes, of which a good rate of 62% so far signed up. Lijbrandt was the only provider in the Netherlands to carry the Soccer 2006 World Championship fully in HD. The network is capable of 100 Mbps symmetrical and can be upgraded to 1 Gbps. Plans are to extend the network throughout the 'flower bulb' area and to pass 120k homes over a 3 year period (as reported before).

Interestingly, Koster says that KPN is interested in being a service provider on the network. When the interviewer suggests that 'KPN will of course buy Lijbrandt in due course', Koster cannot deny this possibility.

Thursday, August 03, 2006

NET NEUTRALITY://An attempt at dissecting

Net neutrality keeps fueling debate, sometimes very funny indeed. I've written about it before and maybe this drilling down is helpful.
I read some interesting stuff coming out of Australia. Dan Warne opens the possibility for ISPs simply never to offer a piece of the pipe. Say you have ADSL2+ installed, you do not market it as 20 or 24 Mbps, but simply as 8 Mbps. Google et al will have exclusive access to that portion, whereas the ISP can claim the rest.
Lastly, one tricky element is how sometimes channels pay carriers, and sometimes it is the other way around.

The net neutrality movements mainly claims this:
  1. Voice is an application.
  2. The network is a dumb pipe.
  3. The end user uses it, not Google et al.
  4. Google already pays.
  5. The client already pays.
  6. There should be equality of services, from both Google et al and the ISP.
  7. Without it, innovation will be stifled.
  8. We need regulation.

In the same order, ISPs answer somewhat like this:
  1. Voice is a service.
  2. No, we add value. Besides, we have shareholders to reckon with.
  3. Google uses it as a service provider.
  4. OK it does, but not to us.
  5. The client pays for internet access, not for a broadband pipe.
  6. Agreed.
  7. No, since your arguments are flawed. Besides, look at France Telecom issuing APIs to developers.
  8. We do not.

Tuesday, August 01, 2006

EARNINGS://KPN's cool leverage still there

KPN shows dramatically expanding margins, resulting from E-Plus (low revenue growth but finally meaningful operating income), KPN Mobile NL (high revenue growth because of Telfort acquisition), cost savings (ahead of target: 40% of FTE's at Fixed from 2004 to 2009) and Telfort integration (just started; to be completed 2008).

Meager 1% revenue growth (negative growth without acquisitions, no doubt!) translated into 10% higher EBITDA, 20% higher operating income and doubling net profit and EPS, although from a low base, helped by tax rate and share buy-back. Cool cost savings and leverage. Maintaining a good track record. FCF TTM still growing.

Mobile almost the same size of fixed now by revenue. Looks like it will be bigger from next quarter. By now 18% of households is mobile-only. Within Fixed, voice is still twice the size of internet by revenues. Dial-up revenues have almost disappeared (EUR 11m).

Going forward:
  • More MTA cuts and international roaming cuts.
  • Investing in Mine, start of All IP network
  • Cost cutting will become more dificult as time passes, but Telfort integration effects still to come.
  • Probably more smart acquisitions, mainly in ICT.

  • Line loss record 253k qoq. Dual play 'InternetPlusBellen' doubles to 153k qoq (nu numbers yet for Slim, the no-frills VoIP product). Net line loss accelerated to 165k qoq. Gains in dual play over line loss increases to 33%. Access revenues and traffic revenues down a record 12% and 13%.
  • Market share maintained in traditional telephony (65%), but dropped by 5 pp qoq (!) including VoIP.
  • By 2007 Digitenne (DTT) will be available nationwide and KPN will start marketing Mine (IPTV) in October. Coverage of the ADSL2+ network has not been extended the last few quarters and will remain at 57%. It remains to be seen how the new All IP network (FTTC build-out starts 2007 in 28k towns) will offer open access.


  • Sales growth decelerated further (partly for drop in handset revenues), but EBITDA exploded (Telfort, lowered SACs/SRCs, improved ARPU and churn, volumes up), resulting in decent margins.