Wireless Operator Strategies

Wireless Operator Strategies provides both a deep and broad perspective of the operator market, combining granular operator-level and market-level data with ecosystem-wide understanding of wireless operator challenges and opportunities.

December 14, 2011 06:06 suerudd

It has been a busy few weeks for AT&T.

Date

Event

Nov 25th/28th

  • AT&T-deep in talks with Leap Wireless, a second-tier but growing wireless player, to sell it a big piece of T-Mobile’s customer accounts and some of its wireless spectrum…..  AT&T hopes such a deal would placate the Justice Department …… or at least to strengthen AT&T’s hand if it goes to trial.

Nov.29th

Dec. 9th

  • US Department of Justice (DoJ) argued before U.S. District Judge Huvelle that since AT&T has pulled its merger application from the FCC, the issue is no longer pressing and there is no need to rush to trial. DoJ asked the judge to delay the trial to an unspecified date in the future.

Dec 12th

  • AT&T has until Jan 12th. to file a report with the court explaining whether it still plans to try to buy T-Mobile.
  • AT&T said that it is considering "whether and how" to proceed with the proposed merger, which needs both FCC and DoJ approval to move forward. If it presents a plan to proceed on Jan. 12th. the pre-trial process will restart on January 18th.

Dec.13th

  • U.S. District Court Judge Huvelle puts hold on Sprint, C Spire Suits and any court proceedings until Jan. 18, while AT&T weighs the future of the deal.

While many are saying the AT&T T-Mobile “deal is dead”, and AT&T has clearly irritated the FCC staff, AT&T is now finally taking a much more conciliatory attitude.

Our recent report ‘It's all about Spectrum - AT&T T-Mobile Bandwidth matched by Verizon and Sprint’ describes how Verizon and Sprint are both buying control of significant extra spectrum. However, the Verizon AWS spectrum purchase from SpectrumCo. requires FCC approval; and once it approves that deal the FCC will find it difficult to argue that a merged AT&T T-Mobile would have an excessively ‘dominant spectrum position’.

Once the FCC allows Verizon’s spectrum acquisition - and after Sprint’s takes ‘virtual control’ of Clearwire’s spectrum - AT&T will have a very strong case that its ability to compete will be diminished if it is not allowed to acquire T-Mobile.

A complete reversal of the original case.

AT&T is working hard to complete the deal and is thought to have two teams pursuing two parallel options.

Option 1. AT&T is negotiating to divest sufficient spectrum and assets to satisfy the regulators. See:

AT&T and T-Mobile: Will there be a Spectrum Fire Sale to Escape Department of Justice and Close the Deal?

See Blog: Could AT&T Settlement Catapult Leap and MetroPCS to Top National Status?

Option 2. AT&T is still preparing to fight in court.

  • Verizon’s recent actions may have significantly helped AT&T’s case.
  • If AT&T makes a new proposal on January 12th DoJ may demand that AT&T refile that proposal with FCC before it goes to trial. [Note: AT&T correctly noted that it is normal to resolve DoJ issues before getting FCC approval. We also noted that in April in: ‘AT&T T-Mobile Acquisition: How long will it take to close?’]

AT&T really…really….really… wants the T-Mobile spectrum for capacity growth and is not likely to give up easily.

But, if AT&T loses at trial there are two other likely options:

Option A. “A network-sharing deal between AT&T and T-Mobile could be established, but this would probably not allow AT&T to reuse T-Mobile's AWS spectrum for LTE. A major blow for AT&T.

Option B. Deutsche Telekom is still anxious to complete the sale as it has major European investment plans for the $39 Billion. It might decide to spin out T-Mobile to a Private Equity partnership pending a later sale to a new player like. Google. [Several options for T-Mobile’s future are summarized in AT&T and T-Mobile: Will there be a Spectrum Fire Sale to Escape Department of Justice and Close the Deal?

We should know by January 12th. 2012, if AT&T can come back with a modified proposal that may be acceptable to DoJ, and then the FCC.

Rethinking US Market Structure and Competition in an IP world.

In a recent policy paper Strategy Analytics suggested that the nature of US Mobile Broadband competition has changed and that ‘All-IP’ networks dramatically change both ‘economies of scope and scale’ and the ‘Relevant Geographic Areas’ that determine Competitive Concentration for Anti-Trust purposes.

See: Policy Insight: New Mobile Industry Structure and 'All-IP' Services change AT&T T-Mobile's 'Spectrum Dominance' and Create new 'Challengers'

There may not however, be sufficient time in the current AT&T case to make such a profound change to the traditional 1980s/90s market analysis. Nor to establish rules for the new digital ‘All-IP’ Mobile Broadband Industry.


September 23, 2011 08:22 suerudd

We noted in the Blog of September 19th. that AT&T has begun to explore possible spectrum sales to other operators to gain approval of its acquisition of T-Mobile USA. Two operators were mentioned as AT&T’s first targets – Leap Wireless and MetroPCS.

Is it possible that AT&T could satisfy the Department of Justice (DoJ) by divesting spectrum to just these two companies? To answer this we looked at whether MetroPCS and Leap have current presence or operations in the right target ‘divestiture markets’ to expand cost effectively by adding spectrum and subscribers from AT&T. 

The amended DoJ complaint of September 16th 2011 states that the “…97 CMAs, identified in Appendix B, effectively represent….area(s)  in which the (merger with T-Mobile US) likely would substantially lessen competition for mobile wireless telecommunications services… each constitutes a relevant geographic market under Section 7 of the Clayton Act, 15 U.S.C. § 18.”

The 97 CMAs identified are those where the Herfindahl-Hirschman Index (HHI) is increased by more than 200 points by the AT&T T-Mobile Deal. HHI is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers. For example, for a market consisting of four firms with shares of 30, 30, 20, and 20 percent, the HHI is 2,600 – Calculated as follows: 302 + 302 + 202 + 202 = 2,600.

Only three CMAs in the Top 100 are not identified by DoJ as an HHI ‘problem’ - Grand Rapids and Flint, MI and Shreveport, LA. Many on the DoJ list however are in the 200+ to 400 HHI increase range that could potentially be diminished significantly by the sale of Spectrum to the third or fourth largest player in each market. 

To see what role MetroPCS and Leap could play we then conducted an analysis of these 97 ‘problem’ Cellular Market Areas (CMAs). In AT&T’s April 21st.2011 filing it listed in Appendices B and C the competitors in all the cities where it operates. The chart below shows that in the 97 CMAs listed by DoJ either Leap or Metro PCS has a presence in all except two - Honolulu, HI and Johnson City-Kingsport-Bristol, TN-VA.

MetroPCS and Leap Wireless presence in the 97 problem CMAs

MetroPCS and Leap are present together in a few CMA’s which might create some competitive bidding in: Philadelphia, PA, Buffalo, Rochester, Syracuse and Albany-Schenectady-Troy NY, Toledo, OH-MI, Lansing-East Lansing and the Upper Peninsula MI, as well as Las Vegas, NV and Tacoma, WA

DoJ’s amended complaint also noted that in “more than half of the (97) CMAs…. AT&T and T-Mobile together would have a greater than 40 percent share. In at least 15 of the CMAs, including major metropolitan markets such as Dallas, Houston, Oklahoma City, Birmingham, Honolulu, and Seattle, the combined firm would have a greater than 50 percent share - i.e., more customers than all the other firms combined.” These are clearly the markets where DoJ is most concerned that the merged entity should have a lower share.

In the 15 markets shown in the chart below the DoJ Post-Merger share estimate is over 50%.

MetroPCS and Leap Presence in 14 of 15 ‘Problem’ markets

Either MetroPCS or Leap is in each of the 14 markets. The only exception is Honolulu, HI where neither is currently present.

AT&T needs to sell significant spectrum, and could potentially accomplish most of the required divestitures with sales to MetroPCS and Leap alone. Provided these two operators can raise sufficient financing – potentially even guaranteed by AT&T - this could catapult these two operators to National Status overnight.

AT&T and T-Mobile’s latest subscriber market shares – as well as those for Sprint Nextel, Verizon Wireless, MetroPCS and Leap Wireless - can be seen at ‘Wireless Operator Performance Benchmarking Q2 2011’.


September 19, 2011 21:23 suerudd

According to two sources speaking to Bloomberg “AT&T is approaching smaller rivals including MetroPCS Communications Inc. (PCS) and Leap Wireless International Inc. (LEAP) to sell spectrum and subscribers” and find a way to gain approval for its acquisition of T-Mobile USA. Sources also said that AT&T “has … reached out to CenturyLink Inc. (CTL), Dish Network Corp. (DISH) and Sprint Nextel Corp. (S) to gauge their interest in buying assets.”

This is the type of strong positive response we predicted in the recent Insight ‘AT&T and T-Mobile: Will there be a Spectrum Fire Sale to Escape Department of Justice and Close the Deal?’ and the earlier blog ‘AT&T Opponents Shift Focus to Challenge Excessive Spectrum Consolidation’. It is likely that AT&T is also reacting to the proposed six month Department of Justice (DoJ) pre-trial schedule and the co-filing by seven states who joined the DoJ lawsuit last week.

Proposed Department of Justice Schedule would go ‘down to the wire.

On September 16, 2011 Department of Justice filed a schedule proposing Monday, March 19 2012 for all steps to be completed in order to be ready for trial. AT&T is anxious to accelerate the process and suggests a completion date of Monday, January 16 2012. This is probably not because AT&T is anxious for a trial but because it still hopes to find a negotiated resolution with both DoJ and FCC as well as the states prior to its March 20, 2012 deadline for enforcing the deal with Deutsche Telekom.

The details of the two proposed Schedules are as follows.

AT&T and DoJ Proposed Schedules

The two parties will meet with US District Court Judge Ellen S. Huvelle on September 21, 2011 to finalize the schedule. AT&T’s proposed schedule is extremely tight for this extensive case.

And the other Parties are Piling on.

Also on September 16 Attorneys General in seven states filed as co-plaintiffs in the DoJ lawsuit. The seven states are led variously by Democrats and Republicans: California, Illinois, Massachusetts, Pennsylvania, Washington, New York, and Ohio. DoJ has had an excellent working relationship with several states in building its case and welcomed their participation.

On the same day Sprint’s attorneys filed motions in Federal Court asking the judge to integrate its case against AT&T in a coordinated proceeding as part of the DOJ complaint.

Summary

These opponents’ actions appear to have stimulated AT&T to initiate aggressive bargaining. AT&T and T-Mobile’s latest subscriber market shares – as well as those for Sprint Nextel, Verizon Wireless, MetroPCS and Leap Wireless - can be seen at ‘Wireless Operator Performance Benchmarking Q2 2011’. User shares are available on request to srudd@stratregyanalytics.com or Pkendall@strategyanalytics.com.


May 3, 2011 20:14 suerudd

On April 27th.several competing operators - Cincinnati Bell Wireless, MetroPCS, NTELOS, the Rural Cellular Association (RCA), the Rural Telecommunications Group, and Sprint Nextel Corporation all requested the FCC to consolidate into a single proceeding the upcoming review of the T-Mobile acquisition (11-65) and the earlier Qualcomm MediaFLO Spectrum acquisition filing (11-18).

“In the proposed Qualcomm transaction, AT&T seeks to acquire Qualcomm's six Lower 700 MHz D Block (6 MHz) licenses, which collectively have a nationwide footprint, and five Lower 700 MHz E Block (6 MHz) licenses in five large markets. The T-Mobile transaction includes the acquisition of an additional 50 MHz on average in the same geographic areas covered by the proposed Qualcomm transaction. Obviously, with such an overlap, these two transactions should be examined together, rather than separately.”

In Appendix B. Competitor Chart of AT&T’s April 21st. Filing there are 567 pages of Competitor Charts for 700 MHz, Cellular, and SMR Licensees that show the Qualcomm D & E Block Spectrum alongside the AT&T Consolidated Spectrum. A Selected example for San Francisco, San Mateo and Washington DC is shown below.

As seen in the above example AT&T’s own Appendix B strongly supports the case for examining the joint impact of the two acquisitions.
AT&T may now regret not having waited to settle the Qualcomm acquisition before seeking to acquire T-Mobile. [Note: Appendix A shows the Spectrum to be consolidated between AT&T and T-Mobile.]

So now the FCC may need to review the competitive and market impact of AT&T's aggregation of spectrum in both proposed transactions on nationwide mobile telephony and broadband services.

AT&T may have trouble establishing that it really needs all the additional Spectrum.

RCA President and CEO Steven K. Berry has called AT&T’s acquisitions a ‘spectrum grab’ and said, “It is clear that AT&T is doing everything possible to gain market dominance by making not one but two major spectrum grabs in the proposed Qualcomm and T-Mobile transactions.”

AT&T is now getting increasingly unfavorable publicity – as Broadband DSL Reports notes “Press (Are) Not Buying AT&T Spectrum Claims”. The chart below is being used in multiple publications to exemplify AT&T’s overreach. It is easy visually to add together either the green 3G columns or the blue 4G columns to estimate the consolidated spectrum of AT&T and T-Mobile. It is apparent they both far outstrip Verizon.

Delay may cause problems for AT&T unless it divests properties rapidly.

The clock is running on the AT&T T-Mobile merger since the FCC established the Pleading Cycle for the AT&T T-Mobile Acquisition (WT Docket 11-65) as follows:

Filings                        Due

Petitions To Deny     May 31, 201

Oppositions                June 10, 2011

Replies                        June 20, 2011

 Despite this aggressive FCC timetable, it is increasingly likely that extensive negotiations will be required – both nationally and state by state. AT&T will probably have to divest sufficient properties to ensure competition in each market on a case by case basis to create even stronger competitors than shown on its website.

The agreement with Deutsche Telekom (DT) however, states that AT&T does not have to agree to divestitures and other regulatory conditions that would have an adverse effect greater than USD 7.8 Billion; only half of subscriber or spectrum sales value is counted towards that sum. AT&T has stated that it is prepared to divest up to 40 percent of the number of T-Mobile subscribers or approximately 13.149 million subscribers - based on the stated value of USD 578 per subscriber. But the likely buyers are AT&Ts competitors who have no incentive to move quickly or to pay full price .

But AT&T’s acquisition agreement with DT for T-Mobile USA has a ‘drop dead’ date of March 20, 2012 after which either AT&T or DT can chose to terminate the deal.

If the deal terminates because of a failure to obtain regulatory clearance there is a provision that A&T must pay DT up to USD3 Billion in cash; enter into a roaming agreement; and “transfer to Deutsche Telekom certain wireless AWS spectrum that [AT&T] does not need for its initial LTE roll-out.”

The growing opposition to AT&T may well push the deal to the fall of 2012 as we predicted in an earlier Insight AT&T T-Mobile Acquisition: How long will it take to close?


January 31, 2011 11:55 Phil Kendall

When a company called Sky buys another called The Cloud while a third called O2 plans to outfox them, there is a joke deciphering part of your brain that just goes into overdrive. But I will leave the telecoms puns to the experts.

The UK public WiFi hotspot market is going to change for good as a result of last week’s deals. Smartphones are increasingly the driver of hotspot connections and it is obviously no coincidence that the early movers in the iPhone business, AT&T and O2 UK, have been the more active in the hotspot market – AT&T acquiring Wayport in 2008 and O2 has been central to The Cloud’s resurgence in recent years (and is now going it alone).

We discussed the benefits of these moves for Sky and O2 in a report today. A WiFi footprint in the kind of places you might want to sit down and catch-up on TV is a great asset for the planned Sky Anywhere service, and building a reputation for delivering a better mobile user experience in places of high data traffic should help O2 given that it hasn’t managed to do this with mobile broadband.

So hotspots are great in the smartphone market and will be important for delivering content to larger screen MIDs and tablets. What we didn’t discuss in this report was the future for hotspots as revenue generators in their own right. That’s because there isn’t much. They might be important in stimulating core revenues on smartphone data plans or content-anywhere services, but even the location owners themselves are becoming more interested in using WiFi to drive core revenues (extra cup of coffee or an extra hotel room) than to generate access revenues.

As smartphone use surges, traditional WiFi hotspot players are seeing their metrics move in the opposite direction:

  • KT’s Nespot / olleh WiFi service peaked in 2005 with over 0.5 million subscribers, though has been trending down ever since despite investing in the footprint. Even during 2010, when KT doubled its hotspot location count to 36,000, it has seen subscriber numbers fall 10% to 266,000, and revenues fall 18% (down to 0.9% of KT’s Internet access revenues). It now makes over 7x more revenue from WiBro than from WiFi;

  • iPass recorded a 12% annual decline in its access revenues in 3Q 2010 (which includes WiFi hotspot revenues, hotel Ethernet and also still some dial-up, though the latter is less than 5% of its total). It saw an annual decline of 8.9% in the number of users paying an up-front fee for access to 552,000 users, with the number of users paying for ad-hoc access also falling 14% to 192,000.

Again, as a newly integrated operator, KT is not planning to expand to 100,000 hotspot locations in order to turn around that Nespot business – it’s all about enhancing the mobile broadband user experience and managing costs through traffic offload. And the same can be said for Sky and O2.


December 30, 2010 22:12 suerudd

Skype today launched Video for iPhone, iPod Touch and iPads. This new version of the Skype service application software lets users make and receive video calls from iPhones, iPod touch and iPads, with instant messaging for other Skype users, over both Wi-Fi and AT&T's 3G network.

Was it a test for this iPhone video application that brought down Skype's Video Network Last week? The story going around last week was that a new release for Apple software - possibly the Skype iPhone Video application announced today - had a problem and triggered the Skype server failure when installed first on one and then several Skype 'supernodes'.

But don't blame the Apple software application.

Skype's supernodes act as both offline message (IM/SMS) relays and as Skype's Chief Information Officer noted yesterday "a directory, supporting other Skype clients, helping to establish connections between them and creating local clusters typically of several hundred peer nodes per each supernode."

The initial crashes brought down 25% to 30% of the Skype supernode servers - just before the normal daily peak. This in turn led to traffic overload that created extensive delays in the support servers responsible for offline instant messaging. This resulted in long response delays to some to Skype Windows clients and 20% of these had an old software bug that then caused them to crash.

The official Skype story was released yesterday by Lars Rabbe, Skype's Chief Information Officer, who describes the "snowball" effect that blocked most Skype users for 24 hours on 22nd.- 23rd. December 2010.

"50% of all Skype users globally were running (an older) 5.0.0.152 version of Skype for Windows, and the supernode crashes caused approximately 40% of those clients to fail. These ... included 25–30% of the publicly available 'supernodes', (that) also failed as a result of this problem."

"The failure of 25–30% of supernodes in the P2P network resulted in .. massively increased... load as (supernodes) reconnected to the peer-to-peer cloud... just before our usual daily peak-hour (1000 PST/1800 GMT)". As users tried to reconnect to the system, they generated "traffic to the supernodes that was about 100 times what would normally be expected at that time of day" and overwhelmed the remaining supernodes bringing the whole system to a standstill.

It is interesting that some sources focus blame on Microsoft, not just Skype's network, servers and software, but maybe the problem is more profound.

P2P Server Architecture.

Serious questions need to be asked about a network service architecture that allows:

  • Application software to crash what should be 'carrier class' servers performing network functions
  • P2P software that causes both network and user device based clients to crash as a result of network overload problems
  • Network server problems that spread automatically across a large number of supernodes

Network servers need to be especially resilient and intelligent in how they 'fail-over' in a distributed networking environment; but a robust Service Architecture is always a pre-requisite.

Let other P2P and 'Cloud' service providers beware.

On a positive note Skype brought in massive extra capacity to stabilize the network and was also able to restore Group Video Calling functionality in time for Christmas.

Software Release Deployment

Lars Rabbe also committed to review Skype's "testing processes to determine better ways of detecting and avoiding bugs which could affect the system.". Hopefully this promise includes:

  • 'Old fashioned' regression testing of all old versions of client software
  • Large scale network testing that does not impact live users - especially at peak traffic times!

These are rules that traditional service providers have followed for decades. Perhaps a little more respect for the "old fashioned" network operators and their software release processes is warranted.


October 12, 2010 04:10 David Kerr

sa photo dk

At CTIA in San Francisco last week, away from the fanfare around LTE rollouts and the next dozen tablet devices (ok, I exaggerate a little), Sprint had an announcement which will have significantly higher impact on mobile broadband adoption and revenues: Sprint ID. 

Sprint ID promises to up the ante on personalization and ease current feature phone users into the smart phone ranks.

Sprint ID offers instant personalization along key themes/packs where the operator has done the heavy lifting of identifying and group related applications of interest to different persona from wallpaper to ringtones to apps. While the one click marketing line is not quite matched by reality given pesky little things like accepting terms and conditions etc, Sprint ID is a significant breakthrough in my opinion as:

  • it broadens the market appeal of Smart phones to current feature phones users with a simple to understand offer in a range of device price points including the critical $49 and $99 levels.
  • it tackles one of the biggest weakness of all app stores: discoverability of content and simple personalization.

Three handsets were featured at launch of Sprint ID: Sanyo Zio™, Samsung Transform™, LG Optimus S™. These three devices cover key price points in the Sprint portfolio and provide customers with a range of form factors, industrial design and brand to meet their tastes. Interesting to note that both LG and Sanyo retain the right to put their own packs on their handsets as well. This is a big win for LG as its Optimus S™ will be available for under $50 with contract giving the vendor a much needed boost in the smartphone space. Samsung meanwhile continues to shine at Sprint occupying the lucrative $149 spot with its Transform™. All three devices of course require a Sprint Everything Data plan.

However, for me the more significant impact is that operators and oems are finally realizing that customers don’t buy phones or services or apps… what they really want are positive experiences

… be that socially connected, sports, education, health and fitness, fashion etc. This is something that our User Experience team has been evangelizing for the last 7+ years. Whether its 80k apps on Android or 250k on Apple store or 10K on RIM, one common experience has been exasperation at the huge waste of time, energy and emotions in finding ANYTHING!!! Which happens first, eyes glazing over or fingers cramping with so much scrolling? Either way the net result is often a disappointing experience which the early smart phone coolaid drinkers have learned to live with.

Newbies to the smart phone arena, will certainly have less tolerance and spend less time to personalize their device and enable applications. Sprint ID is well tailored to the next wave who are taking tentative steps into the smart phone space

 

David Kerr

dkerr@strategyanalytics.com


September 23, 2010 22:09 David Kerr

September 23, 2010

While there has understandably been a lot of attention given to consumer apps post iPhone and the plethora of application stores that have emerged, business mobility and enterprise mobility offer huge potential from horizontal to vertical applications and from smartphones to iPads and tablets to superphones.

In both NA and W. Europe, business customers account for under 30% of users but are the dominant streams of both revenue and profits for operators. On the device side, premium priced models from RIM, Nokia, and Microsoft Mobile licensees as well as the iPhone have long been key drivers of profits in a market where low single digit margins are the norm.  The explosion of smartphone choices has led to the battle ground moving beyond the corner office, to other executive and now increasingly the midlevel manager.

With a new range of devices competing for space in the corporate market, the issue of corporate versus individual liable has become an increasing priority for IT decision makers. Add on the complexity of managing an expanding list of OS (Android, iPhone, Windows Mobile, Symbian, Palm, MeeGo, Bada from Samsung) and the growing importance of mobile portable devices with access behind the firewall and one can already feel a corporate migraine forming…. And that’s before we even discuss device management, mobility policy, device retirement etc. etc.

I am looking forward to CTIA Fall (San Francisco October 5-7) and in particular to the Enterprise Mobility Boot Camp moderated by Philippe Winthrop of the Enterprise Mobility Foundation. The boot camp spread over two days will address many of the issue listed above with our own Andy Brown featured in an analyst roundtable on October 6th.  I look forward to meeting you there. Don’t hesitate to contact Philippe for passes to this the deep dive enterprise mobility event.

David Kerr

David Kerr
Snr. VP - Global Wireless Practice
Tel: +1 617 614 0720
Mob: +1 262 271 8974


August 11, 2010 16:08 suerudd
August 11th 2010 Doing the FCC’s job? On Monday August 9th. Verizon and Google issued a joint ‘suggested policy framework for lawmakers’ which reads as if it had come from the FCC, leading to an appropriate response from FCC commissioner Michael J. Copps that it is “time to reassert (FCC’s) authority”. The framework endorses all the good ‘motherhood’ concepts - openness for legal content, nondiscrimination that does not block or degrade the Internet, and transparency for both wireline and wireless. And it addresses some of the traffic and network management concerns raised in my blog of May 27th . But the sting is in the tail. The fifth and sixth points posted in the expository blog carve out two major markets. The ‘Carve Out’.Two key markets are carved out for minimal FCC oversight and therefore would not be subject to many ‘net neutrality’ and access requirements. First area is ‘differentiated online services’ that integrate application services with bandwidth – “healthcare monitoring, the smart grid’ etc. i.e. vertical markets where performance and security must be guaranteed. The proposed Verizon and Google approach allows each application to be ‘nailed-up’ to a specific network - rather than the Virtual Private Networks VPNs) with Service Level Agreements(SLAs) that operate today. This could lead to significant innovation – if only it were not based on exclusive bi-lateral transport and applications vendor deals. Haven’t we been here before? Didn’t this lead to the original Enhanced vs. Basic Services split of Computer Enquiry II.  And it recreates the comparatively unsuccessful ‘Walled Garden’ approach to applications. Second ‘carve out’ is wireless broadband which is claimed to have “unique technical and operational characteristics” and to be “more competitive and changing rapidly”, so “in recognition of the still-nascent nature of the wireless broadband marketplace” Verizon and Google recommend against applying any of the “wireline principles” except transparency. Broadband is Broadband is Broadband….Although wireless has historically had special treatment, mobile broadband is rapidly reaching parity with wireline speeds and quality. Over the next two years applications will operate seamlessly across wireless and wireline networks and many users may not even be aware which network they are on. To users Broadband is Broadband. All applications require an appropriate class of service at a competitive price. Special value added networks and mobile broadband cannot and should not be carved out from the general area of FCC broadband service oversight. Reactions and Furor on both sides of the ‘pond’ In the US, Wall Street Journal welcomes this ‘Traffic Plan’ and TIA notes that the “Verizon and Google…rightly addressed important issues such as the need for network management welcoming it as a “step in the right direction … and a possible solution to the uncertainty created by the Comcast decision.” But bloggers and the New York Times Opinion page started discussing carrier/search engine business alliances and making jokes about ‘VerGoogle’ that have now prompted a strong tweet denial from Google “We've not had any convos with VZN about paying for carriage of our traffic. We remain committed to an open internet.” Wired magazine however, describes the ‘differentiated online services network’ as a “left-field proposal to anticipate an entirely new information highway for ‘fast lanes’” and believes that “Google and Verizon have proposed creating a second, paid-access-only internet” “over an unspecified global network”. Could that be Verizon’s new Packet Optical Transport Platform (P-OTP) network? Across the pond reactions are still evolving. Financial Times subtly points out that “industry insiders on Capitol Hill and at the FCC are questioning Google’s motives for an apparent about-face on its position as one of the most powerful advocates of net neutrality.” Others reflect the stronger view that the EU is taking on Net neutrality.with one blogger warning that “An obvious outcome … is that when Google is dragged backwards through an antitrust investigation by the EC or DoJ, it will find no favours from civil society after this betrayal…..Good luck, Google - you thought China was sticky in terms of political support, you'll find that was a storm in a delicate teacup.”

July 6, 2010 17:07 Phil Kendall

Yesterday in Paris, Orange unveiled its new five-year strategic plan, Conquests 2015. The plan covers four strategic priorities:

    The conquest of employee pride – to re-build its reputation as an employer;
    The conquest of networks – covering fibre-optic build in France, LTE deployments, the monetization of mobile data traffic (read: no unlimited data plans) and green networks;
    The conquest of customers – delivering a superior customer experience and helping customers navigate through their connected/digital lives;
    The conquest of international development – targeting 2x growth in revenues from emerging markets, with total customers growing from today’s 200m to 300m by 2015.

We published a report profiling the world’s 20 largest mobile operators last week, providing a SWOT and overview of strategic directions. We knew a new Orange vision was on the way, but there are only so many events that can postpone a report’s publication. It is with relief that I can say that, in terms of the key elements of this new strategic plan, enough had been discussed in the past to allow us to predict this quite accurately.

In this report, we looked at two key differentiators for operator performance: footprint (scale) and unification (both in the sense of integrated/converged networks and the provision of integrated services). The more profitable global mobile operators have strengths in these areas and it is good to see they form the basis of Orange’s new strategy.

Orange is very much committed to improving the value of its footprint, both in terms of growing its business in Africa and the Middle East (it is suggesting roughly three-quarters of its emerging market revenue growth could come from M&A here), but also in terms of its mature market footprint, where further consolidation (after the Orange / T-Mobile UK deal) can be expected.

In terms of unification, the next-gen network upgrades are a key building block there, as well as layering in services in areas such as health, education and payments. One of the more interesting statements in this strategy launch was that “Orange must become a multimedia coach for its customers by working alongside them to make their digital life easier”, with Orange’s CEO Stéphane Richard adding that Orange “are trying to be activists for an open world”. That trusted partner role has taken over from the own-branded services/content role as a priority for telcos and it is encouraging that Orange is focusing on its key strengths there.