Week 28 in Telecoms, Media, Internet

CORPORATE

Orange

Appoints Julien Ducarroz CEO Orange PL (from Orange Moldova) and Mari-Noëlle Jégo-Laveissière Head of Orange Europe (Romania, Slovakia, Moldova, Luxembourg)

Telefonica

Telefónica Innovation Ventures invests in Nozomi (cybersecurity)

Proximus

To merge Unbrace (app development) into Codit (IT)

Orange BE

Appoints Xavier Pichon CEO (from BCG; formerly Orange)

Tele2

Appoints Kjell Morten Johnsen (formerly VEON, Telenor) Pres & CEO to replace Anders Nilsson

Zain/Etisalat

Zain & Mobily (Etisalat) plan tower JV in Saudi Arabia

Alphabet/Google

GCP ordered by Deutsche Bank, 10 yr - Rumor: cancelled cloud project for China etc (project Isolated Region) - GCP ordered  by Renault

Amazon

Reuters: to invest $100m in stock awards for Zoox employees (900), may cancel acquisition if large number of employees refuse job offer; to pay $1.3b, to close Sep 2020

Facebook

Sustainability Report: GHG emissions reduced 59% from 2017, 86% of ops powered by renewable energy, total energy usage 2019 +50%

Axios: Facebook boycott organizers share details on their Zuckerberg meeting, generally disappointed (not yet ready to address the vitriolic hate on their platform)

Delays Oversight Board to 20Q4 [see 200506]

Internal Civil Rights Audit report: doesn't do enough against hate speech & disinformation

Microsoft

Rumor: considers offer for Warner Bros games division

Spotify

Ad deal from Omnicom (agencies Hearts & Science, OMD, PHD), $20m: ads around podcasts

Sony

Acquires 1.4% stake in Epic Games (makes Fortnite, Unreal Engine), $250m; valuation $17.86b; total raised $1.83b

Sells Sony Pictures Television France (unscripted activity & Starling) to Satisfaction (renames to Satisfy)

Quibi

[History] - Sensor Tower: <10% of April 2020 sign-ups converted to paying subs (72k of 910k) - Denies

fuboTV

Sells stake to Credit Suisse Capital, $20m (2.1m shares at $9.25); 20Q1: reaches 287k paying subs (+37% yoy)

Nielsen

Plans 3500 job cuts

WPP

3 Units to merge into Finsbury Glover Hering (FGH), WPP to own 50.01%, FGH 49.99% through buy-back

Thomson Reuters

Rumor: Reuters plans paywall from Feb 2021

NPO

Minister finalises plans [see 190606]: to end advertising online & around children's programming 210101, extra state funding rises to 40m EUR/yr; to reduce ad load/income 20% per yr 2022-2027 (total reduction 50%); to add local programming to NPO 2 TV, NPO 3 TV remains youth focused

Vivendi

Canal+ fined EUR 3-5m for opt-out sale 2017

(NETWORK) EXPANSION

Deutsche Telekom

Magenta Telekom extends reach to >50 communities in Tyrol providing services over cablecos & munifiber    

T-Mobile PL expands RSP coverage to full Fiberhost (= Inea) coverage: 1m HH

Iliad IT

Iliad IT to provide services on Open Fiber's FTTH network by 2024

Euskaltel

Euskaltel to provide services over Orange ES 1.8m FTTH lines

Google

Loon launches service (4G) in Kenya (31k miles^2, incl Nairobi) with Telkom Kenya (35k beta users); 35 balloon at 12 miles; down record 19 Mb/s, up record 4.7 Mb/s, latency 19 ms

Google Fiber plans FTTP in West Des Moines (Iowa), city to invest $35-42m in open access conduit network; Google Fiber to rent access for 2.25 $/mo (minimum $4.5m over 20 yr) - Confirms    

5G

Elisa expands 5G in Helsinki

TDC plans Private 5G at Grundfos (pump manufacturer DK), with Ericsson

AT&T plans Private 5G for Phillips 66 (refinery), with Accenture

Fortum Power & Heat plans Private 5G in 2.3 GHz band (20 MHz) based on owned spectrum

Zain KSA expands coverage to 30 cities (in all districts)

Groupe ADP, Hub One, Air France plan Private 4G/5G at Paris-Charles de Gaulle, Paris-Orly, Paris-Le Bourget airports.(1k employers, 120k employees), with Ericsson

India

India plans nationwide fiber (BharatNet) at panchayat (village council) level

Zambia

Fibrecom (= Zesco = gvt) to invest $50m in fibre in 2 yr

Ghana

Vodafone Ghana to migrate subs from copper to FTTH

Spotify

Rumor: to expand to Russia 200715

DAZN

To resume int expansion 200724 (beta)

SERVICES

Amazon

AWS launches AWS IoT SiteWise: managed service that collects data from the plant floor, structures and labels the data, and generates real-time KPIs and metrics to help industrial customers make better, data-driven decisions; first customers: Volkswagen, Bayer Crop Science, Pentair, Genie (= Terex), TensorIoT, Softing Industrial

Twitter

Rumor: plans subscription platform (codename Gryphon)

Disney

Fox Sports NL ends support for Smart TV apps (Samsung, LG) & Apple TV

Comcast

Peacock to focus on AVOD tiers; reaches 1000 employees; to invest $2b in 2020-21; target $2.5b rev in 2024 on 30-35m subs

Peacock content deal with NBU for free matches of NBC Sports’ Premier League from 200715, total 175 mathes in 2020/21 season

Sky Q adds features: new UI, voice discovery, bring together TV & apps more seamlessly, adds sports centers

AT&T

HBO Max to expand to Latam 2021

Crunchyroll orders new original series

Amazon

Prime Video adds user profiles (max 6 per account), with parental controls

Adds tuner to Fire TV Cube for OTA channels in US, Canada, UK, DE, FR

Naspers

Showmax adds live sports

TDC

YouSee (MSO, = TDC) plans stand-alone OTT service YouTv: live TV channels + 3rd-party OTT services

5G

Cable & Wireless Seychelles plans 5G launch July 2020 for smartphones, first in capital Victoria, Roche Caiman district & the airport; with Huawei

Taiwan Star plans 5G commercial launch Aug 2020, with Nokia

Traffic

ACM (NL) Telecommonitor 20Q1: mobile data usage (3G & 4G) 214b MB (+35% yoy), 20.257m mobile lines (+4% yoy), fixwed voice (PSTN & ISDN) 340m minutes (-21% yoy), #SMS -10% yoy, M2M connections 7m (+35% yoy), 7.45m BB lines, 2.76m FMC bundles (+8% yoy), fixed-only bundles 4.17m; market shares mobile data: T-Mobile #1 (>50%), KPN #2 (20-25%), Vodafone #3 (15-20%)

TECHNOLOGY

KPN

KPN demos 8.5/8.5 Gb/s (1 ms latency) over XGS-PON in real-world setting in Amersfoort

Compression

Fraunhofer Heinrich Hertz Institute (with Apple, Microsoft, Qualcomm, Ericsson, Intel, Huawei) developed H.266 = Versatile Video Coding (VVC); to halve bitrate requirement of H.265

2G/3G

GSMA: emerging markets will rely on 2G & 3G for another 5 yr

5G

3GPP finalises Release 16, adds or enhances NR–Unlicensed (NR-U), Integrated Access Backhaul (IAB), Sidelink (C-V2X, device-to-device), Time Sensitive Networking (TSN, replaces ethernet & cabling, suited for Industry 4.0), Precise Positioning (without GPS; based on round-trip delay, angle of arrival & other; precision <1 meter); enhances Release 15 (MIMO/beamforming, power efficiency, latency); [equipment based on enhanced Release 15 & Release 16 to be launched early 2021]; Release 17 (Dec 2021) may be delayed

Samsung launches vRAN for 5G (fully-virtualized); replaces dedicated baseband hardware with software elements on a general-purpose computing platform (scale capacity & performance more easily, add new features quickly, have flexibility to support multiple architectures), reduces maintenance costs (moves to a COTS (commercial off-the-shelf) x86-based platform)

Motorola launches Moto G 5G Plus, EUR 350 (4GB RAM, 64GB storage) or EUR 400 (6GB RAM, 128GB storage) - VinSmart (= Vingroup, Vietnam) launches 5G smartphone Vsmart Aris 5G, based on Qualcomm Snapdragon 765G - OnePlus plans One Plus Nord 5G 200721, rumored price EUR 290

Verizon plans migration to SA core 5G 2020

PLATFORM (SELF) REGULATION, LITIGATION, LICENSING

Platforms

WSJ: EU plans platform regulations aimed at moniopolistic behavior, tax evasion & content liability (hate speech)

Google, Facebook, Twitter halt processing Hong Kong government requests for user data; TikTok blocks usage in Hong Kong (operates as Douyin in China) - US considers TikTok ban - Microsoft Telegram, Zoom also pause data requests; Apple considers - Amazon orders employees to delete TikTok app over security risks - Amazon says order sent by mistake, will not ban TikTok

Indonesia launches 10% VAT on Amazon, Google, Netflix, Spotify

Facebook and Twitter ban posts promoting conversion therapy

Alphabet/Google

Rumor: California plans antitrust investigation

Facebook

Rumor: considers blackout on political ads in the days running up to the US presidential election

Twitter

Bans >50 accounts linked to Identitarian movement (white nationalist)

Apple

Plans to require apps to seek additional permission from users before tracking them across other apps & websites

Amazon

Amazon, authors (John Grisham, Scott Turow, R.L. Stine, Sylvia Day etc) & publisher (Penguin Random House) sue Kiss Library (pirated e-books)

Spectrum auctions

Mexico to delay 5G auction to 2021

FCC: 271 bidders for Auction 105 (3.5 GHz band: 3550-3650, 7 Priority Access Licences (PALs) per county, 10 yr licenses), to start 200727

PTS (SE) proposes combined 2.1 (expires end 2025) & 2.6 (expires end 2023) GHz auctiom, consultation until 200901

China

FT: UK Prime Minister Boris Johnson to demand phasing out Huawei from UK 5G networks

Backdoor accounts discovered in 29 FTTH devices from Chinese vendor C-Data    

FTTH-related news round-up

• In the Netherlands, CIF is reaching the limits of growth, owning a range of small cable companies. Now they are looking to do rural FTTH, with partners, in a ‘line-rental’ model.
• FTTH is expanding in South Africa, of all places.
• Reggeborgh is selling a majority stake of Deutsche Glasfaser to KKR. Is that an early exit or a way to raise massive funds?
• Impressive cost savings from NG-PON2. It is being trialed by Vodafone.
• Structural separation in the UK? Vodafone appears to be the company with the strongest belief in both FTTH and Open Access. People cannot even agree on the UK’s performance in an international perspective. Of course, BT claims a top position, but others, speaking from experience, disagree strongly.
• A Hyperoptic survey points to real estate value increase from FTTP.
• Italy seems to be committed to nationwide FTTH, but remains a bit unclear on where they are.
• Google Fiber: a new unit in Alphabet and much more than a ‘hobby’. Challenged by Google, several operators are doing cross-state FTTH now: AT&T, TDS, CenturyLink and others. Comcast’s 2 Gb/s service: over FTTH and later over Docsis 3.1? It remains somewhat unclear. And the price is pretty outrageous.
• Speculation in Australia over NBN Co returning to FTTP, with Malcolm Turnbull as Prime Minister.
• Sandvine’s September 2015 edition of Global Internet Phenomena Report.
• The ITU State of Broadband 2015 report: 148 nations have an NBN plans.
• Akamai’s latest State of the Internet report.

Singapore: 100/50 Mb/s triple play for under 40 EUR/mo

IDA has ordered Nucleus Connect to construct the active layer (switches and routers, including network termination equipment (NTE) at the subscriber) of the Singapore NGNBN (Next Gen NBN). A presentation is here.

Here are the specs of the entire network:

• Part of the iN2015 policy.
• FTTH PON network, in the familiar 3-layer model. Structural separation between passive and active layers, operational separation between active layer and any RSP owned by the same company (i.e. StarHub). Open access (OA) at layer 2 and 3 (slide 8).
• Passive layer to be built by OpenNet (SingTel 30%, Axia NetMedia 30%, SP Telecomms 15%, Singapore Press 25%). Subsidy SGD 750m. Residential wholesale tariff 15 SGD/line/mo, business 50 SGD/line/mo, no connection fee.
• Active layer to be built by Nucleus Connect, a separate StarHub company. Subsidy SGD 250m. Tariffs (include OpenNet fee; all in SGD/line/mo): residential 100/50 Mb/s for 21, 1.0/0.5 Gb/s for 121; business: 100/100 Mb/s for 75, 1/1 Gb/s for 860.
• Open access to retail service providers (RSP).

And here is the timeline:

• Nucleus to be incorporated April 17 2009, RfP to formally close October 2009.
• Service launch April 2010.
• Coverage 60% by end of 2010, 95% by end of 2012.
• Universal service obligation from 2013.
• 2015 targets: 330k residential subs, 80k business subs.

Some remarks:

• Pretty much fits my ideal for a FTTH network, featuring structural separation of the passive network. See what is does for ownership and bringing in third-party investors. SingTel may spin-off network assets into OpenNet. It goes even further than New Zealand (structural separation only once Telecom NZ gains a majority share) or KPN/Reggefiber (functional sepapartion 'only'). It is striking to see how functional separation in the NL is defended by referring to the competitive situation (nationwide cable coverage), which has nothing to do with it - see Singapore, where structural separation is forced because the network needs to function properly, not because there is competition from some other network.
• Too bad it's PON, not P2P (slide 24).
• The 1 Gb/s offering is neat, though.
• The residential offering is asymmetrical. We are seeing more of this, because FTTH needs to be positioned above DSL (i.e. more expensive), including business DSL.
• The 2015 targets appear to be quite modest, for a state that is home to 4.8m.
• We'll be on the lookout for RfPs to equipment manufacturers. RSPs are suggested to bring their own residential gateways (see slide 26). The NTE will allow end-users to get services from several RSPs at once (as limited by the number of ethernet ports on the NTE, I suppose).
• The 100/50 Mb/s service will be 21 SGD/mo for the RSP (just over 10 EUR/m0), the 1.0/0.5 Gb/s service will be 121 SGD/mo (60 EUR/mo) at the wholesale level for RSPs. The retail price for a triple play will add a margin plus the cost of both TV and telephony. It looks like an extended TV package is 37 SGD/mo, and telephony (line rental, unlimited local calls) is around 10 SGD/mo. The fast triple play would then be around 68 SGD/mo (EUR 33,50), the ultra-fast triple play 168 SGD/mo (EUR 83), before earning the RSP a margin. I suppose the triple play will be commercially available for under 40 EUR/mo.
• MobileOne lost this round, but has stated it will be a RSP. Sureley SingTel will be one too.

Next in line: Australia is due this week to award its NBN contract.

Viviane Reding: how do we get to FTTH?

Viviane Reding delivered this interesting speech at a KPN Forum in Brussels, this week. Thanks to one of the leading Communications Breakdown MUVRs for providing the text.

I am very sympathetic to most views and proposals coming out of the EC, even if the new EU regulator (EECMA) could be a stretch (it remains to be seen how bureaucracy and harmonisation will be balanced).

Here are some quotes that I find particularly interesting, but do read the whole thing (it's not very long):

• "(...) by summer in the mid-term review of the i2010 strategy, I will publish a new indicator of broadband take-up in Europe that compares national performance, not only on broadband penetration but also geographic coverage, speed, competition and price." This is important, since penetration only doesn't tell the whole story. Compare the OECD Broadband Portal.
• "Further service development is likely to result in the need for significantly higher broadband speeds of up to 100 megabit per second or more." There is some room for debate - I have shown some scepticism myself, but 100 Mb/s must be the milestone to focus on. Among the many drivers will also be Web 3.0, which may have significant implications for both bandwidth and storage.
• "I found a widely held view that the European regulatory framework and its emphasis on access obligations to open up competition is not at all the impediment to investment and innovation that some market players claim, (...)." Bravo.
• "How we treat next generation access is therefore the single most important policy question in the telecoms sector today."
• "(...) one of the potential attractions of functionally separating access networks is to make this incentive structure clearer and more operational." Mind you: functional, not structural. KPN is a good example of a telco staving off the 'threat' of structural separation by making functional separation really work (transparancy, good portfolio of services, happy wholesale customers).
• "My worry is that such bundling will, de facto, stifle choice and innovation."
• "Let me be very direct: except where the structure of the market has non-discrimination built into it such as in a well designed system of functional or structural separation the incentive of the telecom company is to design new infrastructures in a way that controls or chokes off competition."

Furthermore, she looks at the "three different models of network upgrade":

1. FTTC + VDSL. "In terms of open competition however there are serious concerns that VDSL could be attractive to incumbent telecom operators, because they require competitive market entrants to substantially scale up their investment in switching capacity." But "(...) unbundling requirements at street cabinet would have to continue to allow competitive access operators to stay in business."
2. FTTB + PON. "But the flexibility in the medium term may be more limited, not least because the end user equipment and the equipment in the network have to be compatible. Unbundling these passive fibre networks is therefore more difficult and the incumbent increases control." (...) "It is unclear that passive optical networks can be unbundled in the way that we see today on copper networks. This requires close attention and probably experimentation with novel architectures, using wave division technology to offer virtual unbundling as a more flexible alternative to bitstream access."
3. FTTH. "The difficulty here is cost: existing ducts are often too small to allow multiple fibres to pass through and therefore major construction spending is required. This is by far the most expensive option." (...) "Point-to-point fibre deployment, meanwhile is rarely being deployed by private market investors. Certainly, this is due to its high cost, but it is also probably due to its openness. Where we do see it being used is in open access schemes initiated by municipalities, in cities such as Stockholm and Amsterdam. These schemes are local partnerships that take a pure 'infrastructure utility' approach by building ducts and end to end dark fibre and then leasing access to service providers. Clearly by so doing these cities have created for their business and citizens a future proof network infrastructure and for the investors in the networks a very long term stable return on their investment given that ducts and dark fibre have a potential operating life of several decades. Under these conditions of guaranteed open access circumstances, perhaps, infrastructural competition is less important than an open and high performance platform. However, the municipal solution seems unlikely to be relevant for all of Europe and could lead to a very fragmented landscape." This highlights the fact that the EC is not a friend of munifiber and is very critical about them. "Whichever infrastructure route we take forward, my conclusion is clear: regulation will have a role to play to keep networks open and to guarantee progress, efficiency and choice."

Behind the end of OEN and Sprint/Clearwire

Here is an interesting story on why OEN (Optical Entertainment Network, a FTTH company in Houston) folded. Apparently there were management issues, but it seems to have boiled down to a tech matter: PON (gear from Alloptic) v. active ethernet (gear from PacketFront). The company couldn't decide. "It was a group of engineers getting together and having a serious case of vendor love."

(PON is cheaper to deploy and has a shorter reach. Active ethernet requires more active electronics, a fatter backbone and therefore looks more future-proof, but it comes at a 15-20% premium.)

By the way, look out for France where FT is a supporter of PON, v. Iliad and Neuf favoring active ethernet.

Which brings me to another (so-called) demise: the end of the intended Sprint/Clearwire partnership in rolling out WiMAX. A new ABI Research report (I haven't seen it, just the abstract) justly points to the fact that it wasn't a contract but an LoI only. I agree with Phil Solis of ABI that the parties may still come together, but I believe they need a different approach, preferably full network sharing.

And: communicating a little better with the investment community.

How to prepare the investment community for FTTH

Yesterday I met with an executive of a leading European telco. He invited me to exchange views. For me, these are always excellent opportunities for some reality checking.
FTTH once more demanded most of our attention. As I see it, telcos are trying to pursuade the investment community to get to grips with it.
Below are my take-aways.

1. VDSL
My companion strongly believes in the viability of VDSL, mainly because FTTH embodies a difficult business case, but also because FTTH simply cannot be rolled-out quickly enough.

Being a member of the Smiling Fiber gang, I of course have no doubts as to the demand side of the equation. FTTH is the end game. Moreover, a back-of-the-envelope calculation shows that you need at least something like 30 Mbps in the mid term (to support several HD TV sets, BB and voice). In order to guarantee this kind of bandwidth, you really need peak performances of around 100 Mbps. QED. (Buffering a few seconds will also go a long way in raising QoS.)

As to the roll-out speed, I suppose telcos do have a point when they install VDSL – for the interim. Look at Verizon: most of the FiOS assets are built in greenfieldish places, which leaves the company extremely vulnerable in places like Manhattan, where Cablevison (Optimum) et al are upgrading. Who knows how many years before Verizon starts digging up those streets of Manhattan (the potholes could come in handy).


2. FTTH
As I have noted before, no matter what telcos say in public, they are all aware of the necessity to move to FTTH, even if this may be some years away.

Public telcos are very much aware of investor focus on FCF and concern over FTTH. However, I see them working on multiple fronts subtly preparing the investment community for the big leap into fiber. PR-related strategies include:

• Stress the reality of fiber today. Thousands of miles are fiberized already, ‘only’ the local loop remains.
• Talk about greenfields. Both KPN and BT say they will roll-out to new boroughs. Now I happen to live in a big new housing development area (no crisis here), but what I have is … copper. A friend of mine who has recently moved into this area (see Map to the right) hasn’t had her home connected yet, but I am pretty sure it will be copper. In other words, committing to greenfields must be taken with a grain of salt but it is great PR.
• Acknowledge the benefits. Capex may be high, but opex will drop dramatically. And superior services can be delivered.
• Point to international developments. Not only PTT-like companies (Verizon, NTT, KT, Telekom Slovenije), but altnets as well (Iliad, Neuf Cegetel, SoftBank, Orange Slovensko), and even MSOs (Numericable, a Japanese co-op).
• Drive the costs down. Verizon publishes decreasing costs for both passing and connecting homes, benefitting from its scale. Mergers will generate some economies of scale. Further, choose point-to-multipoint (sharing a fiber strand) PON technology (however, sharing fiber up to the OLT location may not be sufficient in the longer term, so you may prefer active ethernet over dedicated fiber all the way to the ONT). Also, make sure you have a sound in-home strategy ready, in order to avoid a costly addition to your opex. There is a variety of wired (HomePNA, MoCA, HomePlug for using copper, coax, PLC) and wireless (WiFi 802.11n Draft 2.0, WiMedia UWB) standards available.
• Try to get state subsidies. This strategy worked well in Korea. Point to the economic and social benefits of a FTTH network.
• Wait until greenfield (and other) FTTH build-outs represent let’s say 5% of your access lines. That will be the time to say: “We are at 5% already, and these homes have double the ARPU and a tenth of the churn of the copper base. And you didn’t even see our FCF suffer!”

3. Separation
We disagreed over the issue of investment incentives. Conventional wisdom is that full separation is, if not unnecessary, expensive and bad for network investments. It is supposed to take away any incentive for the NetCo to invest.

Personally, I do not quite see this. In my view, the NetCo would do wise by investing for the long term, enabling it to offer an extensive portfolio to its (wholesale) customers. Of course, there are the usual investment uncertainties; who could guarantee take-up of your shiny services? But I believe this can be dealt with. There are many new services waiting to be (built or) expanded, including monitoring, eHealth, video telephony, home access to corporate VPNs, etc.


4. Consolidation
We briefly spoke about KPN, and its Telfort, Getronics and Tele2 Belgium deals.

After our meeting was over, I got the idea for the perfect answer for Belgacom. If KPN are not stearing toward a merger with their Belgian counterpart and instead go for head-to-head competition, why not make some acquisitions in Holland? (Not unlike Swisscom buying FastWeb).
Tele2 seems to be committed to the Netherlands (a large scale ad campaign has started in relation to its 10th anniversary), DT is buying Orange NL (but may sell-on the former Wanadoo LLU assets to Tele2, bbned, Scarlet or Vodafone) and even bbned (Telecom Italia) is here to stay (it has just started a campaign for the Alice brand, which is new to Holland).
So what is left? Reggefiber! Perhaps Dik Wessels is ready to sell out of this FTTH vehicle, and with Belgacom funding roll-out could be accelerated. Reggefiber appears to be a very disciplined company, which is making a success out of FTTH. In addition, it would be a nice testing ground for Belgacom.