BROADBAND://KPN: We don't do that anymore

I reported before on KPN's efforts to raise ARPU on its low tier internet service. Last week De Telegraaf (the nation's largest newspaper, circulation 836k) quoted a whistle blower: "Staff that play games on their computers, read private customer emails, keep incoming calls on expensive toll numbers on hold longer than necessary and send customers from pillar to post. (..) and all this with management support."

KPN's comment: "Things went wrong in the past, but this is over now."

M&A://Why Amazon.com should buy bol.com

Bol.com is among the largest online retailers based in the Netherlands. During 2006 it grew revenues by 50% to EUR 107m. The site, once part of Bertelsmann, is owned by publisher Georg van Holtzbrinck and publisher/retailer Weltbild.

Bol.com is building a new site for the 2007 Holiday season and fully embraces web 2.0 (recommendations, allowing users to build user groups focusing on themes, writers etc.).

Amazon.com is headed for a 23.6% sales growth over 2006. Its international sales, which it doesn't break down on a country-by-country basis, is pretty stable around the mid-to-high 20s and will contribute about $4.8bn to total 2006 sales of $10.5bn. Amazon has international sites in Canada, the UK, Germany, Japan, France and China.

Why would bol.com be interesting to Amazon?

• First, bol.com is doing very well. It would add to Amazon's overall growth, even though it is small. Including bol.com on a pro forma basis would enhance Amazon's 2006 sales growth to 23.9% from the current estimate of 23.6%. A nice addition.
• Second, eBay's acquisition of local competitor Marktplaats.nl shows that the Netherlands is an interesting market. Bol.com would add infrastructure and local presence. Right now, Dutch shoppers mostly go to the large international sites (including Marktplaats/eBay), or to Amazon.de/-co.uk at best.
• Third, Amazon would not (immediately) have to rebrand the site, which would risk alienating users. Amazon's launch of Endless.com suggests it is ready for a multi-brand strategy.

M&A://Will Comcast by CLECs?

The Wall Street Journal picks up cablecos' interest in the SME market. It is suggested that organic growth is coming down. I would add that buying cable assets (Cablevision, Insight, RCN) includes the risk of clashing with regulators over reaching more than 30% of US households.

My take on this:

• Reaching the desired 20% share of the SME market will not be that easy to get at. Competing on price is the way to go, and telcos are not going to let this happen hands down.
• No end to pricing pressure. Another lucrative market (after SMS and international roaming in the wireless segment) is under attack: business services. Prices could converge to consumer-service levels.
• Why not expand by buying assets? Comcast could target CLECs that focus on the SME market (Cbeyond, Deltacom, NuVox, One Communications, PAETEC/US LEC, Tele-Pacific), including resellers (Granite Telecomms). It would be about their customer bases, that can be transfered to the Comcast network. Add a topping of fiber backhaul and metro assets.

M&A://Will Vodafone team up for expansion?

Singapore Telecomms could have been a Vodafone partner for Asian expansion, comparable to Telkom SA in Africa. But with SingTel expressing plans of its own and controlling shareholder Temasek teaming up with Qatar Telecom, this option seems to vaporise.

The latter move suggests Vodafone could team up with a cash-rich Arab operator (even if Vodafone itself isn't exactly poor).

WIMAX://Monks need no wires

Now here's a new launch: WiMAX is coming to Mount Athos. Where else would you start your nationwide roll-out? Monks may need no women, but they sure do need to communicate.

A blessed plan of the Greek incumbent, OTE.

Aperto is to supply base stations, which just got a nice award.

REGULATION://Extending fiber deeper into the network challenges LLU

Deutsche Telekom is switching back to ADSL2+, apparently to have wider coverage for IPTV (T-Home). VDSL roll-out is haulted and stays at 10 cities (original target: 50).

Big changes are ahead in the European telecom sector. DT cites regulatory uncertainty for haulting the VDSL deployments.

Upgrades to ADSL2+ left the competitive landscape, based on LLU, unchanged, but VDSL and FTTH have created different environments. I believe Europe will support the survival of 'inter-copper' competition, but now it has to come up with an alternative to LLU. This is a hot topic in Germany, but even more so in the Netherlands, where OPTA has to come up with a fully-fledged alternative to LLU. Watch out for this to happen in Q2. OPTA will host an analyst meeting in The Hague next Friday (Jan 19).

So now operators have a choice:

• ADSL2+, with fiber not extending beyond the exchange. This is the case at BT, which sees no business case for FTTN/FTTC, let alone FTTH. This makes the UK an attractive market for LLU-based competition.
• FTTN + VDSL: KPN, Belgacom, DT (now haulted), TI. This renders LLU-based competition quite uncertain at the moment. Will regulaors find a fully-fledged alternative, and/or will altnets be prepared to step up their investment program to keep track with the incumbent?
• FTTH: FT (at least partly, further decisions in 2008). FT is responding to both Iliad and neuf cegetel (and Verizon), by making the network future-proof.
• A mixture of all: Most notably at Swisscom and Telefonica, but I suppose in many other countries too. FTTH is probably pretty common now for new builds.

HARDWARE://Implications from Apple

Apple introduced the iPhone (with Cingular), Apple TV and AirPort Extreme. I am sure they will be widely covered in the blogosphere; I will be short.

Here are my questions and remarks:

• Will the user interface (touch-screen, one button) really work well?
• Why is the deal with Cingular exclusive and multi-year? (The Verizon Wireless/YouTube deal is exclusive for only a limited period of time.) What did Cingular/AT&T offer to get this deal from Apple?
• The iPhone seems an expensive gadget (for now?), therefore addressing a limited market - unless Cingular offers a big subsidy. Apple did the same for Mac and iPod, so that is OK. What puzzles me is that the 8 GB product is a full $100 more expensive than the 4 GB handset.
• What will the Cingular service plan look like, especially the data part? Will they go the Hutchison/X-Series way?
• It lacks UMTS (for now?). Apple seem to be commiting to the GSM-world anyway.
• It has a 2 MP camera, which I personally consider too limited for competing against standalone digital cameras.
• How will the iPod hold up against the iPhone?
• Has a deal been worked out with Linksys/Cisco for the use of the iPhone brand?
• Who will be partners in Europe and Asia?
• Apple follows the divide-and-conquer road, allowing both Yahoo! (push email, search) and Google (Talk, Maps, search) on the iPhone. Skype is a notable absent (but now there is iSkoot - Symbian only, but that will change and could include the Apple OS?), but Jajah has stated that it will be compatible.
• Will there be any truth in Eliot Van Buskirk's rather compelling case against iTunes?
• The AirPort uses the hip draft-11n standard.
• Apple TV ($300) must hurt Sling Media's new SlingCatcher (which will be cheaper at < $200), as well as Orb (free).

UPDATE (Jan 11):

• UI: see David Pogue in the New York Times
• Price points already include Cingular subsidies, so it seems.
• Cisco is suing over the iPhone name.
• It looks like it will be a closed system: no downloads of any VoIP clients (Jajah needs no dwonload).

UPDATE (Jan 22):

• iSupply calculates the cost of the $500 handset at $246. The 4GB NAND flash memory costs $35, the 8 GB costs $70.
• Telefonica's O2 is rumoured to be a partner in Europe.
• The draft 11n standard gained support at the IEEE, but full ratification is not expected until April 2008.

THIRD PIPE://Benefiting from having less or better legacy infrastructure

TeleGeography reports Electropaulo plans a PLC (BPL) trial, after three years of testing. During that period, data rates increased to 200 Mbps from 45.

Some remarks:

• Third pipes are coming to life. J-COM and StarHub are doing pre-DOCSIS 3.0. BPL and DOCSIS are forcing VDSL services upon telcos - or FTTH, for that matter.
• In some cases, non-western operators seem to have the advantage of not having too much legacy infrastructure.

ECOMMERCE://Amazon launches new brand

Amazon.com added a new store (in beta, though), this one devoted to shoes and handbags (there already is a shoes section on the main site).

What is striking about this one is the new brand name: Endless.com. This looks like a first and could be related to the brand values of suppliers, who may wish to not get behind the Amazon brand.

As usual, the site appears highly customer centric (great search, free overnight shipping, free return shipping, 110% price guarantee, 24 hr customer support). Free returns could be bad for margins especially when shoes are concerned (but as we know, Amazon is in the volume business). Still, wouldn't it be smarter to limit some of these excellent customer services to Amazon Prime subscribers?

On the side: it seems that Riya's Like.com (image search, for now devoted to jewelry, clothing, and ... shoes and handbags!) would be a nice add-on to the site.

2007: extending 2006 trends

Here are some thoughts on 2007, mainly as simple extensions of 2006 developments.

Telecom:
- 2006 was the year of the seeds of WiMAX (more of a supplement than a replacement) and wVoIP (to rebalance mobile pricing toward flat-fees)
- My personal favorite: Google’ efficient power supply
- Third world countries profit from the lack of legacy systems, as witnessed by WiMAX, 3G and NGN builds
- Regulation: international roaming cuts to be effective; NMa on Tiscali/KPN; one EU regulator; the rise of VDSL/FTTP (NL, D) will pressure regulators and altnets alike
- Structural separation: to happen in Ireland, Denmark, New-Zealand
- Standards, technology: 802.11n ratification, UWB certification (and a mobile handset from SKT/Staccato), CDMA Rev C, TVoW
- Auctions (spectrum, licenses): UK (WiMAX/mobile TV/UMTS), Russia (3G), Montenegro (2G/3G), Kosovo (2G/3G), Macedonia (2G/3G), France (UMTS), China (3G), Kuwait (2G/3G), Saudi Arabia (2G/3G), Chile (3G), Nigeria (3G), Cyprus (WiMAX), Italy (WiMAX), Finland (mobile TV)
- Operator launches: Etisalat in Egypt, eMobile in Japan, Vodafone BB in the UK; WiMAX from Sprint and many others; more FTTH (focus on symmetrical BB)
- Service launches: X-Series (Hutch), IPTV (KPN), TVoW, wVoIP, WiMAX; mobile and fixed operators converging by moving toward triple/quad plays
- MVNOs: many to come to market (Spain, France)
- Subbrands: telcos will copy KPN’s sucessful strategy
- For sale: Hutch 3G, Hutch Essar, Tiscali UK, FastWeb?, TDC mobile assets, PT, directories of Windstream, Endemol (Telefonica), debitel DK/FR/NL/Slovenia, TIM Brasil (TI), TIM Hellas (TPG/Apax), Alltel, Leap?
- Buyers include PE, China Mobile, Vodafone; and professional hooverers KPN, BT, FT; more ICT takeovers
- Corporate: strategy update from DT
- IPO: NextWave (from OTC to Nasdaq) and Clearwire; Oger Telecom?; Idea Cellular
- Mobile: tariffing (homezones, personalisation, flat rates) aimed at FMS, reducing churn and stimulating data/3G usage; more applications, as diverse as Disney Mobile, Nokia’s new software-based N-Gage, KPN’s AyWorld and payments/banking; advertising-based services (Blyk MVNO in the UK)
- Applications: will an operator buy an applications provider?
- The dogs of 2006: Sprint Nextel, DT, FT, TI, Telecom New Zealand

Internet:
- 2006 was the year of: video, Web 2.0 (UGC, social networks, sharing), virtual life
- Terry Semel will leave Yahoo!, Susan Decker to take over, replacement for SD at Audience unit
- Google market share is likely to peak
- eBay could start paying dividends
- Jon Miller (formerly AOL), Dan Rosensweig (formerly Yahoo!), Lloyd Braun (formerly Yahoo!) and Ross Levinsohn (formerly News Corp) are looking for jobs
- AOL could be sold
- Yahoo! could score more telco/cableco deals
- More offline deals (mobile, print, TV, radio)
- The dogs of 2006: Yahoo!, eBay, Amazon.com, Cnet, Overstock.com

Media:
- 2006 was the year of: broadband video, VoD, place-shifting
- Regulation: the US could drop the 30% audience limit on MSOs
- EMI and Warner Music are likely to merge finally; Vivendi will sell its 20% NBC Universal stake to GE
- RCN is still up for sale
- The education units of Thomson Corp and Wolters Kluwer will be sold
- Launches: a new free, ad-funded high-quality newspaper, delivered daily door-to-door in the Netherlands
- #3 movies (i.e. 2nd sequels): Spiderman, Bourne, Shrek, Pirates, Ocean’s
- Ad accounts under review: Wal-Mart, Heineken, Philips
- The dogs of 2006: Viacom, Lagardere, XM, Sirius