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Business News – Alliances, Mergers, StrategyRegulatoryInternet, Networks and MultimediaInformation TechnologyMiscellaneous – Market StatisticsReview of 3GSM, BarcelonaVodafone makes move into India
The Vodafone Group has paid $11.1bn for a controlling stake in India’s Hutchison Essar. It has bought the stake from Hutchison and says it will work with Essar to run the company. Vodafone also pledged to invest a large sum of money in India’s telecoms infrastructure.
The operator has also signed a memorandum of understanding to share wireless network sites with the other main Indian wireless operator, Bharti Airtel. Since Bharti is Essar’s main rival, one analyst has suggested that Essar may block the deal.
India is seen as a lucrative growth market for wireless telephony, hence a promising target for Vodafone. Reports say that the company may also target other emerging mobile phone markets in Asia, Africa and Eastern Europe.
Vodafone has also pledged a large sum to upgrade its network in Germany.
Shortly after the announcement a rumour appeared saying that Vodafone was seeking a loan facility from a bank amounting to several billion pounds, in order to pursue corporate goals, presumably more acquisitions and investments.
MaceCorp Comment:
This represents a change from the operator’s previous strategy which has been to concentrate on Europe and North America. It still holds a major stake in Verizon Wireless, but some are speculating that it may elect to sell this to finance further forays into emerging markets.
. . . while BT Global Services expands its overseas footprint
In February, BT’s Indian joint venture, BT Telecom India, has bought i2i Enterprise, an Indian provider of communications services to enterprises. The company was previously a distributor for BT Infonet. BT is also applying for licences to offer telecoms services in the country. According to BT Global Services’ chief Andy Green, BT hopes to become one of the largest foreign operators in India. BT sees the country as one of the world’s fastest growing IT and business outsourcing markets.
In Europe BT raised its stake in the Italian service provider I.Net to 64%. Last year announced that it was rebranding its Italian networked IT services business and start trading as BT Italia SpA, bringing together the former Albacom. and Atlanet.
The operator also acquired US-based communications services provider International Networks Services. This is the latest of a series of major US-service acquisitions, beginning with BT’s acquisition of Infonet in 2005. BT Global Services has 2,500 staff in the US and owns the second largest IP network in the country.
Egyptian investment group buys Italian owned Greek operator
The Egyptian owned Weather Group has bought TIM Hellas, Greece’s third largest wireless operator, from another group of investors headed by Apax Partners. The Weather Group is backed by the wealthy Egyptian Sawiris family. It recently acquired the Italian operator Wind, the second largest fixed line and third largest wireless operator in Italy.
The Group also owns the wireless operator Orascom, which has operations in several mid-Eastern and Asian countries. Orascom has a small stake in India’s Hutchison Essar (see feature above). The acquisition has sparked speculation that other cash rich investment groups from the region, such as Emirates-based Etisalat and Kuwait-based MTC, will be seeking more European telecoms buys.
. . . while China Mobile gains control of Pakistani operator
China Mobile has bought a majority stake in Paktel, Pakistan’s fifth largest wireless operator, from the Luxembourg based investment group Millicom International. This is a further indication of non-US and non European groups buying European owned telecoms assets.
Japanese handset makers form alliance to develop 3G phones
NTT DoCoMo is partnering five handset Japanese manufacturing companies to develop next generation mobile handsets and basic hardware and software. They hope the joint effort will reduce development time and costs.
MaceCorp Comment:
Saving development time and cost is a major driver in sharing effort here, just as it is in sharing 3G networks by wireless operators.
EU Data Retention regulation for telecoms looms large
The EU Data Retention Directive (EDRD), which covers the retention of data from IP and data networks, will come into force for all mobile and fixed operators in all 27 EU member countries by September 2007. The EDRD mandates the retention of voice call and Internet traffic related data in all 27 member countries, to be made readily available on demand to law enforcement agencies for cases of serious crimes, including terrorism. The directive includes the retention of data not only from mobile phones, Internet and fixed telephony, but also messaging and e-mail. The data must be retained for a period of time between six months and two years, but some member states may extend that period further.
European operators are facing a huge burden, not only on account of the cost to collect and store the data from a wide variety of sources and of the volumes involved, but also over the need to recover and reconstitute the information in a rapid timeframe. The cost of long term storage is considerably cheaper than storage of data that needs to be accessed rapidly.
MaceCorp Comment:
The Directive is similar to the CALEA (Communications Assistance for Law Enforcement Act) regulation in the USA which is slightly different as it concerns lawful interception of ongoing calls.
UK local loop unbundling reaches 1.5 million lines
BT’s access business unit, Openreach, announced that as of February 2007 it had unbundled 1.5 million lines.
Progress in unbundling is monitored by the Office of the Telecoms Adjudicator (OTA). The goal of unbundling 1 million lines during 2006 has been reached, and now the OTA is to concentrate on making it easier for customers to change from BT to another service provider. This procedure necessitates a complicated back office procedure which has not always gone smoothly, and has resulted in numerous complaints from both customers and unbundlers, rivals to BT.
This milestone will also allow BT for the first time to set its own charges to the ISPs who resell its product.
MaceCorp Comment:
BT avoided break-up in 2005 by forming a separate access division, Openreach, which would own the access lines and make these available to all service providers on exactly the same terms as its own retail and wholesale divisions. All in all the unbundling experience has been deemed a success, and proponents say it could be a model for other European countries.
European wireless operators opt for network sharing
Vodafone UK and Orange UK have forged a non binding agreement to share their 2G and 3G wireless networks. The pair already have a similar agreement to share their 3G networks in Spain. They intend to merge their separate radio access networks while maintaining control over their own traffic and services and competing against one another. The arrangement will allow for a faster roll-out of new, high speed mobile services and allow for a reduction in the number of new masts needed for 3G and consequent reduction of up to 30 percent in costs. However, one commentator points out that it would be technically difficult to share 2G masts; hence it is not surprising that the operators have only said they are committed to exploring opportunities ‘as technical solutions become available’.
Orange UK has also begun rolling out the HSDPA upgrade (Orange 3GPlus) it announced in 2006. This will initially cover the London area but will eventually be rolled out to cover Orange’s 3G UK network.
Meanwhile T-Mobile has announced it would consider a similar network sharing arrangement in one or two European countries, but has not yet named the countries.
Ericsson launches very small and very large range wireless cells
Ericsson has launched its new ‘femto’ Cell Solution. This is built around a tiny GSM base station which can be installed within a home.
Through a home access point, wireless operators would be able to offer a competitive home area tariff to everyone in the household, including fixed calls. The access point can connect to any existing IP backhaul network and subscribers’ mobile phones would switch to the indoor radio base station automatically as they walk through the front door.
Meanwhile Ericsson has teamed with Telstra to launch what it claims to be the world’s largest range mast, extending coverage from a typical 50 km to 200 km. Australia’s mobile coverage is good in urban areas and along the main highways but rural areas have scant coverage. The network will support broadband speeds.
WiFi networks progress apace
A WiFi milestone has been reached in that there are now 100 handset types that have been certified for the technology: some are single mode and some dual-mode WiFi/GSM. ABI Research forecasts that by 2011 there will be 325 million dual mode handsets in use world-wide.
Meanwhile more cities are becoming WiFi enabled. In the UK, the city of Norwich is the latest. In the US the city of Houston has contracted to build out the largest ever WiFi network covering a 600 square mile area, and Los Angeles plans to follow suit.
However concerns are being raised as to the possible hazards of WiFi, similar to those raised some years back for the use of mobile phones. A long term study which ended in 2006 showed there was no conclusive proof of risk to users of contracting brain cancer from mobile handsets, and this has allayed fears somewhat. There could still be long term effects which would only become manifest after ten or more years of usage, and a UK group is seeking funding from the government to conduct a new, wider study.
MaceCorp Comment:
It has been rumoured that BT may enhance Fusion, which combined cellular and WiFi technology, with WiMax spectrum. However, a member of BT’s futurology team told MaceCorp that WiMax technology in a form usable in products was several years away.
Fibre to the Home rolls out in Paris
Fibre to the Home (FTTH) is to be rolled out in 13 towns in the Paris area. A subsidiary of Neuf Cegetel has been awarded a public service contract to build the network, and the first phase of this contract will cost nearly Euro10bn. Neuf Cegetel is the main alternative operator in France, owning a nation-wide fibre optic network and providing broadband service to two million subscribers. Neuf Cegetel sees FTTH build-out as a way to control the local loop and offer higher speeds for premises at some distance from the exchange.
The arrival of new telecoms multimedia services and high bandwidth necessitates a new, more flexible network infrastructure that can support delivery of such services better than traditional WDM networks. Hence many operators and municipalities are rolling out FTTH across Europe. France Telecom is piloting a FTTH network in Paris. There are questions to be resolved over the FTTH architecture and how to use it deliver services. A number of European cities are also building city-wide networks, including Stockholm, Vienna, Amsterdam and Cologne.
Another major incumbent, BT which has DSL-enabled its access networks, is not in such a hurry. BT plans to launch ADSL2+ in 2007 which it says should provide adequate support for new services including IPTV, and believes there is no business case for deploying FTTH at the present time.
By contrast, Deutsche Telekom is building out a high speed fibre optic network nation-wide. The operator however has announced it will not open this network to rivals, provoking a threat from EU regulators of prosecution.
MaceCorp Comment:
FTTH roll-out is at an advanced stage in Japan, where the high population density makes the investment worthwhile. The issue of network sharing will come to the fore, as views differ as to whether fibre networks are covered by the same unbundling obligations as conventional access networks.
. . . as BT begins roll-out of its 21st Century network
BT has begun roll-out of its IP-based 21st century network (21CN). Migration of customer lines from PSTN to the new network has begun in the city of Cardiff. ADSL2+ should be available later from 2007 and 50% of subscribers should have 24Mbit/s broadband speeds from 2008.
BT has also announced the vendors selected for the second phase of the UK roll-out, which is expected to cover the remainder of the UK by 2011. They include Nortel and Siemens who will supply Ethernet backhaul and multi-service access nodes. BT considered several technologies, but had to take into consideration the obligation to offer access to the core-to-MSAN link to its competitors on an equal basis as BT’s own customer serving divisions.
European regulators move towards stronger enforcement of data protection
The UK now plans to make the theft, misuse or sale of personal data an offence punishable by imprisonment as well as a fine. Currently a fine is the only penalty. Data theft from stolen PCs as well as theft from companies themselves is causing increased worry among the British public: a recent TV investigation revealed that criminal gangs were selling UK credit card and passport details obtained from employees in Indian call centres.
In Britain, ID theft is costing the country £1.7 billion annually. There have occurred recently two cases where the personal and financial details of customers were put at risk: first, the Department of Work and Pensions mistakenly sent thousands of details of customers to the wrong addresses; and Nationwide was fined heavily for losing a laptop computer which held customers’ details on it.
At the end of 2006, the Consumer Protection Co-operation Regulation came into force across EU member states. This is designed to protect consumers from fraudulent scams delivered via the phone and e-mail through the creation of a network of country-based public enforcement bodies that can transcend borders so that perpetrators will have nowhere to hide. Examples of such scams include the fraudulent sale of time share products.
Open Source Consortium is formed
A group of ten open source software producers have formed the Open Solutions Alliance. This will promote the expansion of open source technology in business. The companies are not widely known as mainstream suppliers but develop mainstream business software – database, CRM, ERP, based on Linux. The members will also work towards making it easier or their products to interoperate.
MaceCorp Comment:
Some businesses still distrust open source software and many contracts to supply systems prohibit the use of open source technology on account of a perceived lack of reliability and security. There are also issues of third party intellectual property – uncertainty of ownership.
Moreover, the consortium members face a huge challenge in penetrating the complex maze of enterprise IT systems, built using proprietary technology and knitted together by systems integrators at great cost.
Wireless Machine to Machine enters the growth phase
According to a new report from Juniper Research, wireless machine to machine (M2M) is entering the growth phase. The analyst estimates that the total world market for M2M will increase from $20 billion in 2006 to over $74 billion in 2011.
M2M connects an enterprise’s machine assets with its IT infrastructure and workforce through the public wireless network and the Internet. Readings taken from remotely connected machines are transmitted to the organisation’s back office systems and transformed into meaningful information for processing by the business. The model may be applied to a wide range of industries, from Tracking and Telematics, where the machine asset belonging to the organisation – in this case a vehicle - is moving, or to a utility meter located in a household. M2M installation projects are complex, costly and long term, so that although the technology exists to make them feasible today, they have been slow to roll out on large scale.
Mobile data service spend will rocket in the coming years
A report from Strategy Analytics has forecast that Mobile Data Service consumer expenditure will reach $200bn by 2011. Concomitantly the number of mobile data customers will increase from 1.8 billion to 2.5 billion by that date. Growth will be fuelled by the availability of new services such as new messaging tools, music streaming, mobile video on demand and mobile TV. Growth will also be enabled by more sophisticated handsets and network capability.
This year’s 3GSM in Barcelona drew huge crowds as before. Mobile handset manufacturers were out in force and showed off their new offerings. In our opinion some notable developments were:
Microsoft launches Windows Mobile V6
Microsoft’s upgrade of its Windows Mobile operating system, which rivals the Symbian OS, is designed to improve users’ productivity, security and bringing additional functionality such as messaging. Users will be able to access Microsoft’s office products (Excel, Powerpoint) on their phones as well as their company intranet.
Microsoft also recently launched its Visa operating system, Office 2007 and Exchange Server 2007, which proponents claim will make companies information systems easier to manage and use, as well as be more secure.
Nokia showcases GPS navigation
Nokia has launched a navigation service ‘smart2go’ for use on its smart phones and PDAs. With mapping software from TeleAtlas and Navteq, users will be able to utilize a range of location-based navigation and routing services in 150 countries world-wide.
MaceCorp Comment:
After a slow start from 2001, location based services and the use of mobile devices for tracking and navigation appears to have entered the growth phase. This is helped by the maturation of assisted GPS-based (A-GPS) high accuracy tracking technology and chips that can be easily embedded into handsets at reasonable cost. According to one source, more A-GPS enabled handsets will be brought out in 2007 and 2008, which will boost the market for applications that require high accuracy positioning.
BT and Orange grow their FMC offerings
BT is adding new handsets to support its BT Fusion fixed mobile convergence product. Orange recently launched a FMC service dubbed ‘Unique’ that allows Orange broadband users to make both mobile and VoIP calls.
At 3GSM Orange has also launched its ‘Super SIM’ card which when inserted into Orange handset will allow users to install content of choice from their PCs. The card has 128MB of storage.
Mobile infrastructure makers espouse environmental responsibility
At the 3GSM show Nokia Siemens was much in evidence. The recently formed wireless networks giant is a 50:50 joint venture of the networking infrastructure divisions of these two companies, to rival the Alcatel-Lucent and Ericsson-Marconi merged technology leaders. The venture will target networks and subscribers in emerging markets. It will also address challenges that include assuring power supplies in parts of the world where these are intermittent and unreliable, and also work towards reducing power consumption by its products.
Motorola and Ericsson are also working on making their technologies more environmentally friendly. Motorola is developing base stations that use wind power, whilst Ericsson is developing a bio-diesel based fuel cell.