OFFLINE://Internet on the move

CONSOLIDATION://Orange NL for sale

A newspaper in the Netherlands reports France Telecom has hired Lazard to shop Orange NL around. The unit has 600k BB subs and 2.0m mobile subs and should bring in EUR 800-850m.

Observations:

• Fixed NL: KPN is forcing a choice upon altnets, building its All-IP network: retreat (or be a reseller) or step up investments to make SLU work, as the old paradigm (FTTEx + ADSL2+ = LLU from up to 1300 exchanges) is replaced by a new one (FTTN + VDSL2 = SLU from up to 28k street cabinets). The outcome is still up in the air, as OPTA seems to be backtracking on earlier support of KPN's plans, but Orange seems to think neither option is very attractive. Telecom Italia, through bbned, and Tele2/Versatel seem to be committed to the Dutch market.
• Mobile NL: The mobile market is going to a three-player model if T-Mobile or Vodafone moves in. T-Mobile could even go from a mobile-only strategy (as in the UK) to a triple play offering (as in France). Unless of course China Mobile, Weather, Telefonica, Telecom Italia, Belgacom, Swisscom, CPW or TeliaSonera (cf. Xfera in Spain) deems the time right for a new market entry.
• France Telecom: Going from 5 to 4 countries for its triple play offering (France, UK, Spain, Poland).

Consolidation is continuing, driven by a need for scale economies in mobile and LLU (not to mention SLU). More units could be put up for sale (DT France, DT Spain, Tiscali UK, Tiscali Italy, SFR). What is intriguing is:

• Companies are abandoning saturated markets, like Scandinavia and now the Netherlands (the Tiscali NL sale to KPN is pending at the NMa) and are turning to emerging markets.
• Vodafone, according to the newspaper, wouldn't be interested in Orange NL. Puzzling. Could this be the first step of Vodafone putting even more focus on emerging markets?
• If T-Mobile isn't interested, they might as well leave the market altogether.
• Telefonica is definitely a consolidator. Will they bid for Orange NL, or target the bigger prize: KPN?
• Will this be the European entry of an 'eastern' company (after Hutch and Weather)?
• As PTTs are fighting each other in their home markets, could this sale mark the formation of a pan-European kartel, e.g. FT and DT getting out of each other's markets?

UPDATE: obviously, existing players could strengthen their current presence:

• Telecom Italia: to add a retail business (and mobile) to their bbned offering.
• Tele2: to gain scale and a mobile license, in order to migrate their current reseller business.
• Scarlet: to mirror Tele2's strategy of turning into a facilities-based operator.
• Cableco: to add mobile and to sell the fixed business to somebody else.

MONETISATION://MySpace playing divide & conquer after all

While Google and MySpace are renegotiating their search/ads deal, eBay may be stuck in the middle. According to the Wall Street Journal (which doesn't necessarily mean it's true), Google would like keep eBay off of MySpace. Google and eBay compete not only for commerce leads, but for listings and payments as well.

Under a MySpace/eBay deal, the latter would add 'peer commerce' and payments to the former (and what about Skype?).

The interesting thing is in the negotiations part of the story. A MySpace/PayPal deal was on the cards long ago. It looks like it would allow MySpace to stay in control and demand a large cut of any revenue sharing deal by using a basic divide & conquer strategy after all.

KPN RESULTS://New definitions used to hide worsening performance

Results 06Q4: somewhat weaker than expected. Even mobile is down. Net line loss, as concocted by KPN, is down to 130k for the quarter, but regular line loss (as defined previously by KPN) is up to 357k (from 267k the previous quarter)! Access lines (PSTN + ISDN) are down 9% qoq and 21% yoy!

Guidance 2007: weaker than expected. Revenue and EBITDA to be flat. Share buy-back EUR 1bn as expected. Dividend LOWERED to EUR 950m (from EUR 1bn over 2006). Free cashflow EUR 2bn v. EUR 2.4 bn in 2006.

All-IP Network: real estate value lowerd to EUR 1bn (from 1.0-1.5), capex 2007 lowered to 0.9bn (from 1.0-1.5).

MOBILE DATA://Operators into search?

The Telegraph reports that Vodafone, Orange, Telefonica, T-Mobile, Hutchison, Telecom Italia and AT&T plan a Google/Yahoo! rival for the mobile environment.

One may hope this isn't true. First, Google and Yahoo! have algorithms and advertiser networks that are hard to replicate. Second, mobile operators can demand a large slice of the pie, possibly 80-90%. Why such an expensive and non-core effort, just to get to the other 10%?

Possibly these efforts are aimed at something else, like standardisation, security and spam.

USER INTERFACE://A big leap at NYU

You have to see this short film on YouTube. It's part of this article on Rediff.com.

Jeff Han works at NYU.

"Google should have something like this in their lobby."

THIRD PIPE://Amsterdam inspires FriscoNet

San Francisco released a feasibilty study regarding munifiber. A promising element is that the city had Dirk van der Woude come over to give them some advice. Dirk was involved in getting Citynet started in his hometown Amsterdam.

Recently he also pointed me to this Light Reading article, from which he took a number of quotes:

"threaten to overwhelm even their fattest broadband pipes"
"It's definitely a real problem; there's definitely a storm coming."
"Prepare your networks for the primetime on-demand wave."
"There's an absolute risk of people dropping basic video service for
Internet video."
"Thanks to these trends, some tech executives contended that the bandwidth
crisis may never actually end for cable operators."
"They're even weighing such previously unthinkable moves as building
fiber-to-the-home (FTTH) networks".

On the other hand, some respected research firms still dig in, doubting the demand side of the equation:

"We conclude that the new broadband divide would be best bridged using a
combination of VDSL and fixed wireless."
"Our main conclusion is that any decision to promote investment in higher
speed broadband on the grounds that it will accelerate economic growth cannot be
justified by evidence that such investment will have a measurable effect".

POST-LLU REGULATION://What about VDSL and Openreach in the Netherlands?

Coming back to OPTA's timeline note (summarized before and here also) and publication of the Analysys study, I can add a few remarks after having talked with OPTA and KPN. OPTA was rather candid about acknowledging that this would not exactly be what KPN presumably likes to hear at this stage. It looks like OPTA is backtracking, having been a little bit too generous for KPN. They should have awaited Analysys and competitor responses.

• OPTA will not enforce the Openreach model on KPN (to be announced mid February). This is what I 'read between the lines' talking to OPTA. There are two important factors behind this. Most of all, cable is hurting KPN much more than it (NTL/Virgin) does in the UK. In fact, it looks like there are only few countries where cable has this kind of strength (Belgium; Germany in due course, once the analogue/digital upgrade is done). In other words, only PTTs of Portugal and Spain et al could be at risk for having an Openreach kind of regulation. Second, KPN is mirroring Openreach as it is, judging its carrier portfolio (range of services and pricing).
• Late February really is the 'date' to watch. By then, OPTA will come up with some sort of Fully-fledged Alternative for LLU. Personally, I have a lot of sympathy for the Australian model, where 9 altnets have come together. Other than that, the situation appears pretty much deadlocked.
• KPN's official plan still is to launch VDSL services on May 1. Will OPTA block this?

REGULATION://Setback for KPN regarding closure of MDF locations

nwrjAs I have posted before, moving from FTTEx + ADSL2+ to FTTN + VDSL requires a Full Alternative to LLU. This is exactly what is happening in the Netherlands, where KPN is building its All-IP network. OPTA, the local regulator, today published a brief note on how it will proceed.

Back in October, OPTA was generous in recognizing that it should support KPN in moving forward, i.e. it planned to allow KPN to close many of its MDF locations. The trouble is, that is exactly where competitors' DSLAMs are colocated.

Today OPTA publishes the timeframe for how it will proceed. The note seems to include a big setback for KPN: OPTA will, for now, not proceed in making formal Policy Rules. It seems to acknowledge that SLU is not a Full Alternative to LLU. Things seem to be pretty much deadlocked.

The main points from today's note:

• Market analyses to be published 07Q2.
• The report from Analysys may be published (what does that mean?). The main conclusion is: SLU is not economically viable as an alternative to existing LLU players (unless such a network would be limited to 1000 street cabinets in the most densely populated areas).
• SLU + SDF backhaul doesn't seem to be a Full Alternative to MDF access. It appears that MDF access cannot be withdrawn (unclear is under which circumstances KPN would still be allowed to close any locations). OPTA is pondering what a Full Alternative could be and thinks it will publish the result late February.
• The NERA report on applicability of the British model (Openreach, equivalence) is to be published mid February.
• Making rules on jointly laying fiber has no priority.

NEWSPAPERS://Another free paper to hit the Dutch market

Tomorrow a new free daily will hit the Dutch market, simply called Dagblad De Pers ('Daily The Press'). Obviously, they couldn't claim the 'De Pers' name for being too generic.

I posted before on this paper. The main characteristics are:

• Vis-à-vis existing freebies (Metro and Telegraaf's Spits): De Pers will be a 'quality' paper with more extensive distribution, i.e. not exclusively on public transportation (railway stations), but at 'retail, petrol and office' as well. In fact, my employer will allow the De Pers guys to drop of a bunch of papers every day. It seems that the people over at Telegraaf and Metro are pretty nervous over the new entrant. Metro has just made a smart move: they secured a deal with retailer Super de Boer (300 locations), which will extend their circulation to 535k (from 430k). On the other hand, Metro lost the exclusive right to distribute through railway stations, and it is rumoured that De Pers has already moved in at a cost of 1.2m EUR/annum.
• Vis-à-vis subscription papers: De Pers obviously has the advantage of having an advertising-based business model, but it has a substantial number of negatives: no door-to-door distribution, no weekend edition, no brand recognition (even worse: despite its ambition to be a 'quality' newspaper, being free puts it in the low quality Metro/Spits market). Originally, entrepreneur Marcel Boekhoorn (who made his fortune buying Telfort for EUR 25m and selling it to KPN for almost a billion) planned the paper as a joint venture with PcM (which publishes a set of quality newspapers, including NRC, Trouw and Volkskrant, combined circulation 720k). PcM changed its mind (Boekhoorn is now trying to squeeze some funds from PcM for exiting discussions at a late stage), but now appears to be interested in starting its own free paper.