Turmoil in Yahoo!/Semel aftermath keeps eBay merger option alive

I believe all the turmoil around Yahoo!, after CEO Terry Semel quit, fortifies the case for a merger with eBay, which I defended before.
Keep in mind that Google is the perennial enemy to both. Microsoft on the other hand is carefully treated as an equally beleaguered colleague, rather than as a competitor.

The recent animosities by no means endanger a Yahoo!/eBay merger:

• Google was ready to invade eBay's Live event, which made eBay pull away from AdWords. Instead, eBay could be a bigger Yahoo! partner.
• Google attacked Microsoft over Vista's desktop search. The case was settled.

Nor do the recent advances, quite to the contrary:

• Yahoo!'s problems keep any merger speculation alive, particularly with Microsoft.
• Now the Times of London reports that News Corp floated the idea of swapping MySpace for a 30% Yahoo! stake. I believe the implied MySpace valuation must be too high for Yahoo!, which proved quite frugal when approaching Facebook. Also, I believe that Yahoo! needs to be a 'content neutral' aggregator, not a News Corp vehicle.
• However, the eBay/MySpace talks are still ongoing.
• Yahoo! has not responded to Ron Burkle's try to involve Yahoo! in a counter offer for Dow Jones, News Corp's much desired prey.

In other words, I think Yahoo! is carefully aiming for eBay. At the same time, News Corp must be kept at an arm's length.

Reggefiber expanding in Brabant

Recently, I reported on Dick Wessels' Reggefiber FTTH group launching in the Dutch Brabant region. It targeted 50-80k subs in a number of towns in 2 years time. Now, it looks like we can add the nearby town of Helmond to the list.

Assuming that the numbers are alright, the population covered would grow by 86k v. 155k in the original 5 towns, or by over 50%.

Australia plans ADSL2+/WiMAX network

Australia has awarded AUD 958m to the OPEL Networks joint venture of Optus and Elders, to build a combined ADSL2+/WiMAX network. It is part of the government's Australia Connected initiative.
The network will consist of 15k km of fiber backhaul, 426 exchanges (to cover 3m households with ADSL2+) and WiMAX (for regional areas).
End-user pricing should come in the range of 35-60 AUD/mo, depending on speed. In 2009 the maximum speed should be 12 Mbps, which is subsequently to be raised. The network should cover 99% of the population. The other 1% is eligible for a 2750 AUD/household subsidy.

I find this a remarkable move. First, the G9 consortium (around Optus - also), as well as Telstra, is vying for building a FTTN/VDSL network. Second, an ADSL2+/WiMAX looks like combining 'old' technology (ADSL2+) with unproven and possibly inferior (to LTE) technology (WiMAX), as Telstra is eager to point out.

For reference, read Alan Kohler's case for FTTH (as opposed to FTTN) and Grahame Lynch's case for a merger of the G9 consortium members, which nicely fits my view on how to beat the incumbent.

Regulation 2.0 in the Netherlands delayed

KPN and its competitors have asked OPTA for a delay of 1 month; now they have to come up with a 'Full Alternative' to LLU by July 15. Subsequently, OPTA will publish its new ruling by the end of the year.

Should the parties involved fail to reach an agreement, then OPTA has set itself a deadline for publishing a market analysis and proposed rulings by October 15.

I've written many times before about this extremely important topic. KPN is building its 'All-IP' network (including a nice headstart), which includes the closure of MDF-locations (of which there are 1300) and the extension of fiber to the street cabinet (of which there are 24k) level (FTTC). The consequenses include:

• Heavy investments for KPN, to be financed from the sale of the related real estate, coupled with opex savings.
• The ability to offer VDSL2 services for IPTV (and triple play). So far, the 'Mine' (IPTV) product is barely marketed, obviously because very few households are located near enough to an MDF (for top ADSL2+ bandwidth) or are covered by VDSL2 pilots.
• Competitor DSLAMs will be rendered worthless, unless the MDF locations would be kept open after all. However, that in turn would cause interference problems (between KPN's VDSL and any altnet's ADSL services) and it would also give KPN a big advantage (VDSL v. ADSL performance).

Therefore, the closure of MDF locations signals the end of LLU. Sub-loop unbundling (SLU) is the obvious successor, but not economically feasible (according to Analysys). In other words, a 'Full Alternative' (other than resale) is hard to dream up. We will see.

In the meantime, KPN was allowed to buy yet another ISP (Tiscali NL), and T-Mobile is close to acquiring Orange NL. I am sure T-Mobile is interested in the mobile assets of Orange only, which effectively puts the former Wanadoo BB unit on the market. Any lack of interest among the remaining players (Tele2/Versatel and bbned/Telecom Italia):

• May signal the end of infrastructure-based intramodal competition on the KPN-network, as it would put Tele2's and TI's commitment to the Dutch market in doubt.
• Which would lead to a duopoly market (cable having near 100% coverage).
• Which would highlight regulatory asymmetry (no resellers on cable networks).
• Which would lead to open access to cable networks (OPTA will publish its cable market analysis in 07Q3).

Web 2.0 award winners: all the usual suspects

Check out CNET's 'WebWare 100' award winners, even though the list isn't very distinctive in that it contains just about all the usual suspects.

Notable absentees include many of the big virtual reality sites (Second Life et al). Only the MMORPG Gaia made it to the list.
Other sites conspicuously missing include NYT's About.com and Yahoo! Answers; mash-up engine Yahoo! Pipes; social shopping sites like Shopstyle.com; office suite look-alikes such as Zoho; social address book Plaxo; video (and revenue) sharing site Revver; blog search Technorati.
In the 'Productivity and Commerce' section my eye fell on Basecamp (project management tool from 37signals).

I counted 13 apps from Google, 9 from Yahoo!, 8 from Microsoft, 5 from eBay and 2 each from Amazon.com and News Corp. Taken together, that is just a third!

For reference: read this CNN Money article on virtual reality; Time.com's article on 37signals, belonging to a category that looks like a new area for telco's to go takeover shopping; this survey from Evans Data, ranking Web 2.0 developer programs (do not go beyond page 28 for text errors).

Admire Sling

You have to admire Sling Media, not just for their basic Sling Box, that I wrote about long ago, but for their continous product developement. Yesterday they added HomePlug PLC connectivity for in-home networking. Check out this year's harvest:

070106: Plans launch of SlingCatcher (box) + SlingProjector (software)
summer 2007, < $200 (internet/PC-to-TV)

070109: Launches Clip+Sling: share content on-net (among Slingbox users), deal with CBS (beta)

070207: Launches Palm OS version (beta)

070322: SlingPlayer Mobile to be pre-installed on Amp'd Mobile's Q (from Motorola)

070410: Plans support of Apple TV

070516: Plans ISP service 2007 in the US

070606: Teams with NHL: allow Clip+Share

070618: Adds SlingLink Turbo 1 Port ($100) and SlingLink Turbo 4 Port ($150): in-home connection via HomePlug PLC

Silicon Valley business model in the Netherlands: be bought by KPN

The KPN takeover was looming large over the Tiscali Wholesale Annual Partner (ISP customer) Day I was invited to speak at, last Thursday. OPTA (the Dutch NRA) has spoken supportively of NMa’s (the Dutch competition watchdog) approval of KPN buying Tiscali NL. Closing is expected this month.

I suppose KPN’s plans could be anywhere between fully dismantling Tiscali NL and maintaining it as a standalone operation. One thing seems inevitable: a namechange, as Tiscali SpA’s Italian and UK operations are now completely unrelated. Possibly KPN will have the retail branch focus on a certain demographic, under a new label. The wholesale operations could actually be kept at an arm’s length to service ISP’s who suffer a certain degree of ‘green-phobia’ (green being the KPN corporate color – formerly that is). The latter part of Tiscali NL will be cherished, I suppose, because it only recently scored its largest customer win: Vodafone NL, which is working toward it's fixed/mobile strategy. I hear that Vodafone issued its RfP around the time that KPN and Tiscali came to an agreement (September 2006), so when Tiscali NL was chosen, Vodafone was very well aware of the KPN takeover.

Vodafone NL was also invited to speak. Daniel Nordström presented the new fixed/mobile strategy. I wonder if Vodafone’s mobile portfolio could be offered to Tiscali Wholesale’s other ISP customers. Of course, that would be a tough sell at the new parent company (KPN), but it could be a smart way of luring green-phobic customers and at the same time get some inside information on a competitor. However, I doubt KPN would allow Tiscali this level of independence.

What stood out during the day was Tiscali Wholesale’s focus on the end user, which coincided nicely with my own presentation, which related Timothy O’Reilly’s Web 2.0 to STL’s Telco 2.0. People at Tiscali are definitely aware of those developments in the marketplace.

Also, I touched on LLU in the Netherlands, which is coming to an end because of KPN’s ‘All-IP’ plans. What will OPTA come up with to replace it (a ruling is due this month)? If SLU is not feasible (as Analysys calculated), something rather big seems to be heading our way. I believe LLU and SLU are intermediary strategies, fiber is a natural monopoly (both in the backbone and on the in-home level) and thus open access FTTH is inevitable. How about some separation (to add some recent news: Sweden is looking at the Openreach model)?

I aired my growing surprise at the lack of willingness to cooperate among network operators. Recent developments are few and include Australia (G9), possibly Sweden (Telenor/Tele2/Telia) and Nigeria (25 ISPs teaming to build a WiFi network). Sure, these operators are backed by competitors, but if you want to compete with the powerful incumbent, you better get together.

Which brings me to my final observation. We all know the ‘business model’ of many a start-up in Silicon Valley: be bought by Google. Now, somebody confided to me that a similar model was explicitly chosen by many ISP’s in the Netherlands: be bought by KPN. And we all know how that ended!

Come and meet me in Maarssen (NL)

Those wanting to meet the writer of this humble blog, all you have to do is become a Tiscali Wholesale customer in the Netherlands (now a KPN subsidiary). Next Thursday, June 14, I was asked to provide a sector view at Tiscali's annual 'partner' meeting.
More about this after the meeting.

Vodafone launches WiMAX service

The Vodafone group adds a another technology, aimed at being a 'Total Communications' provider. Apart from owning a DSL-operator (Germany) or reselling one (UK, Italy, etc.), the company (i.e. MTC-Vodafone) is launching WiMAX service in Bahrain.
It is the fixed-wireless version (16d), in other words the DSL-replacement.

FTTH round-up

Since my last post updating the FTTH market, relatively many deals were announced:

• Hafslund, a Norwegian utility, will build a network in Ostlandet. Dirk van der Woude points me to the fact that this part of Norway, which includes Oslo, actually contains almost 50% of the entire population. Hafslund is controlled by the city of Oslo.
• More utilities and municipalities at work: the tiny town of Dijkerhoek (NL) will get a network; the Rural Utilities Service (RUS) of the US Department of Agriculture approves PacketFront's solution, which makes deployments eligible for RUS grants and loans; the Swedish town of Sundbyberg will get a network; both Powell and Cody (Wyoming) are exploring PPP (public private partnerships).
• And from the telco front: activities at Telekom Slovenije, Golden Telecom (Russia), neuf Cegetel (France) and France Telecom, and finally TEO (Lithuania).
• Finally, regulatory developments. Arcep (France) is consulting on two issues: duct access and sharing of the 'last 10 meters'. In related news to the latter, the FCC has issued rulings that should facilitate both telcos and cablecos easier access to MDUs (multiple-dwelling units). I always thought differently, but sheetrock is labelled 'physically inaccessible'.