The Italian government has done very well with the LTE spectrum auction, raising €3.9bn

The Italian government has confirmed that the country’s LTE spectrum auction has closed with bids from the four local operators reaching in excess of €3.9bn, double the reserve price placed on the frequencies. The bidding process lasted just 22 days and saw bids from the main carriers: Telecom Italia Mobile (TIM), Vodafone Italy, Wind Comunicazioni (Wind Italy) and 3 Italia (H3G Italia).

Spectrum in the 800MHz, 1800MHz and 2.6GHz bands was up for auction, which will become available for use in 2013, 2011, and 2012.

Vodafone Italy bid successfully for a total of 60MHz of spectrum, acquiring 20MHz in the 800MHz band, and blocks in the 1800MHz and 2.6MHz bands.

Telecom Italia bought two blocks of 800MHz spectrum, and two blocks of 2.6Hz and 1800MHz spectrum for a total of €142m. Wind acquired two blocks of 800MHz for €977m, and bought four lots of FDD spectrum for €142.

3 Italia was expected to bid for the premium 800MHz band but declined to do so, instead purchasing licences in the other two bands for a total of €305m.

Industry Minister Paolo Romani said in a statement that, “It is an amazing achievement, which places Italy in a more advanced position than most of Europe. In a difficult market situation, we managed to attract a large amount of investment. The total proceeds go beyond expectations”.

The Italian government had hoped to collect €2.4bn through the tender process, a figure dwarfed by the final amount. It can also look forward to additional funds, with a deadline of 4 October on bids for the remaining TDD block in the 2GHz band.

The LTE North America 2011 conference takes place on the 8-9 November 2011 at the Fairmont Dallas Hotel in Dallas, Texas, USA.

Telenor has tapped ZTE to build an LTE network in Hungary

The Hungarian subsidiary of European carrier Telenor has tapped Chinese equipment vendor ZTE to build a 4G LTE network supporting multi mode and multi band services.

Telenor, which used to operate under the brand name Pannon in Hungary, is the country’s second largest wireless carrier with 3.5 million subscribers at the end of June. The operator is sandwiched between T-Mobile with 4.8 million customers and Vodafone with 2.4 million.

Over the next five years ZTE will provide the company with radio and core infrastructure including its Uni-RAN platform and SDR functionality. The Chinese firm will expand and operate the GSM/UMTS/LTE network and deploy over 6,000 base stations, including LTE eNodeBs throughout the country.

In other LTE news, leading Italian operator, Telecom Italia, said it is undertaking a trial of LTE in collaboration with Nokia Siemens Networks (NSN) in Turin.

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This week the carabinieri issued arrest warrants for a total of 56 people in connection with a €2bn tax fraud and money laundering scam reportedly linked to the ‘Ndrangheta – the Calabrian mafia – which took place between 2003 and 2006. Italy’s second largest fixed broadband provider, Fastweb, is also embroiled in the investigation and company founder Silvio Scaglia, who had an arrest warrant out for him, made the police an offer they couldn’t refuse by turning himself in this morning. Scaglia no longer has anything to do with Fastweb, which he sold to Swisscom in 2007, but headed up the firm during the time of the allegations.

The authorities claim that the service providers faked transactions to avoid paying certain taxes and have seized around $400m from Sparkle while the investigation proceeds. Parent Telecom Italia released some unapproved results for 2009, which revealed that organic EBITDA for the year was in line with 2008 at €11.3bn, while revenues were down 5.6 per cent year on year to €27.2bn, reflecting a repositioning strategy away from handset sales where revenues were down 22.1 per cent to focus increasingly on services, where revenues fell by just 4.2 per cent.

Web giant Google also fell foul of the Italian authorities, with two employees and one ex-worker who left the firm in 2008, convicted of breaching Italian privacy regulations. The case started in 2006 when students at a school in Turin, Italy, uploaded footage of themselves bullying a schoolmate to Google Video (this was prior to the acquisition of YouTube).

Google removed the video at the request of the police, but a public prosecutor in Milan pressed on with an indictment of the Google employees. At the outcome of that trial this week, a judge in Milan issued six month suspended sentences to the Google staff for failure to comply with Italian privacy laws. This suggests that content hosting companies, like Google Video or YouTube, would be criminally responsible for the content of videos uploaded by users.

Commenting on the decision, Matt Sucherman, VP and deputy general counsel for Europe, Middle East and Africa at Google, said: “European Union law was drafted specifically to give hosting providers a safe harbour from liability so long as they remove illegal content once they are notified of its existence.”

A notice and take down regime of this kind is designed to help creativity flourish and support free speech while protecting personal privacy, Sucherman said. But, if “sites like Blogger, YouTube and indeed every social network and any community bulletin board, are held responsible for vetting every single piece of content that is uploaded to them – every piece of text, every photo, every file, every video – then the Web as we know it will cease to exist, and many of the economic, social, political and technological benefits it brings could disappear.”

Yes, it’s the sort of incident that gets the hackles up, giving everyone, including the British government, a chance to jump on their soapbox and shout down some foreign draconian autocracy, right before they tell the nanny state to put its hands over our eyes ‘for the sake of the children’. The UK Home Office this week released research claiming that kids are being increasingly exposed to sexual imagery online and it should be the job of the internet service providers – fixed and mobile – to police all the content their customers can get access to. Good luck with that, or as the Calabrian mafia probably say, “fuhgedaboutid”.

Unfortunately for Google, it’s not just the Italians, but Europe as a whole that’s got it in for the firm. Earlier this week Google confirmed that it has been notified by the European Commission of the receipt of complaints from three companies: a UK price comparison site, Foundem; a French legal search engine called ejustice.fr; and Microsoft’s Ciao! from Bing.

The crux of the complaints is that Google’s algorithms demote these sites in Google’s search results because as vertical search engines themselves, they compete with Google to some extent. So the issue here, which the EU may or may not choose to investigate, is whether Google is using its majority share of the search and advertising markets to suppress competition.

Julia Holtz, Google’s senior competition counsel, denies this: “Our algorithms aim to rank first what people are most likely to find useful and we have nothing against vertical search sites – indeed many vertical search engines like Moneysupermarket.com, Opodo and Expedia typically rank high in Google’s results,” Holtz said.

Never mind policing web content, the operators have probably got more pressing issues on their minds – to continue the theme from World Congress – just what to do about all this data traffic. This week UK broadcaster the BBC announced record breaking requests for its IPTV-based iPlayer application. During the month of January, requests for the BBC iPlayer across all devices including Virgin TV set top boxes, topped 120 million, driven by on demand viewing.

While iPlayer is used for TV at roughly the same time of day as linear TV viewing, on demand makes up the great majority of TV programme requests with only eight per cent of requests for live simulcast streams, although two thirds of requests for radio streams are for live programmes.

PCs and laptops remained the firm favourite for viewing iPlayer content, accounting for around 87 per cent of all traffic, with mobile handsets delivering only a thin sliver of requests. But the stats do show just what other kinds of devices will contribute to the bandwidth crunch, with the Sony PlayStation 3 and the Nintendo Wii accounting for eight per cent and four per cent of requests respectively, something which bodes well for open IPTV initiative Project Canvas.

According to research released from consultancy TNS this week, the kind of apps that are available on a mobile device are becoming an increasingly important tool in the battle for customer loyalty – something which Apple has exploited successfully in its assault on the mobile space.

Following on from a survey of 27,000 UK consumers, TNS discovered that almost one quarter of users are now placing their primary loyalties with content and application brands like Facebook, Twitter and Google – that’s the same amount that are primarily loyal to their operator.

When considered as an individual element, the single most important factor in handset choice remains look and feel (29 per cent) but available applications and content – games, music and maps perhaps – ties for second place with handset brand (13 per cent). However, this figure rises to 37 per cent among consumers aged 16 to 30, and according to TNS, almost a fifth (19 per cent) of UK users are regularly downloading applications to their devices.

Interesting stuff, as these figures claim to show a shift in how consumers are shopping for devices, although that shift is less apparent when all factors are taken into account. When all aspects of a device are considered, apps sink to the bottom of the list, with consumers more easily swayed by look and feel, handset brand, touchscreen, and genuinely interestingly, which operating system it sports.

According to Stephen Yap, group director at TNS Technology: “As uptake and usage of mobile services proliferates, we are seeing profound changes in the way that people make purchase decisions and in the brands that are the most meaningful to them.  While established handset makers are standing their ground, network operators are clearly under pressure from the rise of the likes of Facebook, Google and Twitter. These content providers are increasingly capturing consumers’ loyalties and are leading the way in bringing users the benefits of the latest mobile technologies.”

Apple may have exploited this phenomenon to its advantage, but that didn’t stop Mark Doherty, Adobe’s mobile evangelist for the Flash platform, putting the boot into Apple for “restricting open technologies like Flash.”

Telecoms.com this week posted video footage of Doherty demonstrating Flash Player and Adobe Air running on Android. Yet the technology’s absence on the iPhone has been duly noted. Doherty told telecoms.com: “We have done a lot of work to build Flash Player for the iPhone, but Apple at this time haven’t decided to have Flash on the iPhone. We encourage them and have demonstrated that it works really well on other platforms and at some point in time the apple user base will start demanding the full internet.

“Today 70 per cent of games on the web are Flash based and 75 per cent of video is played back through Flash Player. Apple just seems to want to have some control over their ecosystem and effectively tax their developers. But our business model is about selling tools and enabling our developer customers and content providers to get access to consumers and that’s why they use Flash because it allows them to do that in a consistent manner across all screens.”

Doherty said he believes the pressure will build on Apple and force it ultimately to support Flash on the iPhone. “Recently seven million or so iPhone users have actually come to our player download centre to download Flash Player because they didn’t know it wasn’t available. So now we have a special page up telling these visitors that Apple is restricting open technologies like Flash,” he said.

Telecom New Zealand (TCNZ) would probably love to have the data boom headache, but unfortunately it’s got a headache of a different kind – it can’t get it up. On Tuesday, TCNZ’s chief technical officer, Frank Mount, resigned in the wake of technical problems stopping the operator from keeping its shiny, new HSPA network running for more than a couple of hours at a time.

Infrastructure partner Alcatel-Lucent has reportedly been put on notice for failing to fix the issue, and on Monday the vendor announced the appointment of Jyoti Mahurkar-Thombre as head of its New Zealand operations, following the resignation of Steve Lowe, who oversaw the TCNZ deployment.

Perhaps there was something in the industry Kool Aid this week as there was more quitting to be had. Dan Moloney, president of Motorola’s Home business, which makes set top boxes, left the company to head up a small, Philadelphia-based electronics firm – Technitrol. The news comes just weeks after Motorola announced plans to split up in early 2011, spinning off its handsets and set top box unit into one entity and its enterprise and networks arm into another.

Meanwhile, Harri Koponen, the chief of Swedish carrier Tele2, also walked out citing “irreconcilable differences” with the company. Koponen joined Tele2 in 2008 as president and CEO and oversaw a period of increased focus on profitability, with a refocusing of the company’s footprint in Russia and the CIS.Tele2 said Koponen will receive his maximum notice period of 18 months during which he will be paid. In the interim chief financial officer Lars Nilsson has been appointed CEO, while the board of directors embarks on a search for a new chief.

France Telecom already has a new chief in Stephane Richard, and it was straight in at the deep end for him as FT announced a drop in profit for 2009 this week. German counterpart Deutsche Telekom was in the same boat, ahead of the March 1^st pronouncement from the EC on the proposed merger of the two carriers’ British mobile businesses, T-Mobile UK and Orange UK.

And it’s the EC that FT’s blaming for its 26 per cent year-on-year profit drop to €3bn last year. Back in 2004 the EU Competition Commission ruled that the French Government had been giving FT illegal tax breaks prior to 2003 and, last year, the carrier had to pony up almost €1bn in payback. On the upside, the firm said, it grew customer numbers 5.7 per cent across the year, although revenues were down 1.8 per cent at €46bn. The firm pledged to focus on staff welfare from now on, following a disturbing spate of employee suicides during 2009.

DT, meanwhile, saw annual profits plummet by 76 per cent to €400m, with Greek operation OTE hit by that country’s financial crisis.

Off to India now, where finally, finally (although the Informer’s not holding his breath), the long delayed auction of 3G spectrum in India has been given a new date – April 9, 2010. Commenting on the announcement, T R Dua, director general of the Cellular Operators Association of India (COAI) said that the GSM industry had been “eagerly awaiting” the 3G auctions, which seem to have been delayed on a monthly basis for the last year or so.

Still, the news has got the local carriers digging in their pockets. This week, wireless infrastructure operator American Tower Corporation (ATC) agreed to acquire a further 4,450 wireless communications sites in India via the purchase of Essar Telecom Infrastructure – the cell site unit of the Indian carrier.

ATC’s Indian subsidiary, Transcend, will acquire the firm for a total consideration of $430m. The move will almost triple ATC’s presence in India, where it already operates around 2,550 sites. Essar’s site portfolio averages approximately 1.8 tenants per tower, ATC said. Last month, India’s biggest communications infrastructure operator, GTL Infrastructure, took over the tower assets of local carrier Aircel in a deal valued at $1.84bn. Under the agreement, GTL will take over 17,500 existing towers and will take over rights to roll out 20,000 more.

And that’s about the size of it for this week,

Ciao,

The Informer

The Droid will be known as the Milestone in Europe

The Motorola Droid, unveiled last week as the first Android-powered handset to use the version 2.0 firmware, is on its way to Europe under the guise of the Motorola Milestone.

Italy and Germany will be the first markets in Europe to stock the Milestone, with further availability to be announced at a later date.  It is believed T-Mobile, Vodafone and O2 will launch the device in Germany, while Italian carriers are not yet confirmed.

In a slider form factor with a full QWERTY keyboard, the Droid/Milestone boasts a 3.7” high-resolution capacitive touchscreen, with a width of 854 pixels and more than 400,000 pixels in total. The camera weighs in at five megapixels, with a dual-LED flash and video capture, backed up by 16GB of removable storage.

Connectivity is provided by 3G, wifi and Bluetooth as well as A-GPS, while the operating system is Android 2.0, supporting multitasking for six apps, and access to more than 12,000 applications via the Android app store. Droid is also the first device to support Google Maps Navigation (Beta), which provides turn-by-turn voice guidance as a free feature of Google Maps and can also be voice controlled.

But perhaps the most advantageous thing Droid has got going for it is a Webkit HTML5, Flash 10 ready browser, and an ARM Cortex A8 processor, making it roughly twice as fast as existing Android handsets.

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Telecom Italia, 3 strike site sharing deal

Network sharing is becoming increasingly commonplace in the mobile industry, and Italian operators Telecom Italia and 3 Italia have taken tentative steps in that direction with the announcement of a co-siting agreement.

The deal will see TI and 3 share radio mobile access sites – including both existing sites and those which will be built in the future – and concerns a minimum of 2,000 locations.

The objects of the agreement are the so called “passive” infrastructures: poles, cables, electricity supply and conditioning systems and other civil infrastructures, yet the companies expects costs savings of about 30 per cent when the deal is in full swing. The agreement will last for three years and is renewable.

In a bid to boost nationwide coverage, the two carriers will also house each others’ radio mobile stations, but this will not include devices capable of delivering services to customers.

“The value of this agreement is two-fold,” said Stefano Pileri, director of technology and operations at Telecom Italia. “From the point of view of efficiency, it will be possible to significantly reduce the cost of site leases, one of the highest cost items in mobile networks. Secondly, the progressive reduction of the number of antennas will have a positive impact on the environment”.

Informa Telecoms & Media analyst Paul Lambert recently commented that network and infrastructure sharing has come a long way. “A few years ago operators were not only focussed on operating networks; they saw the complications to agreeing the legal aspects of sharing too much of a barrier to enter into deals.

“While it’s true that the economic downturn is leading operators to broker deals that may in the past have broken down, the timing of it coincides with the change in operators’ priorities.”

It’s first worth explaining why this small window onto the world matters. After all, why should the global telecoms industry care about what’s happening in Denmark? It’s certainly not one of Western Europe’s largest markets. With just 5.5 million people living in 2.53 million homes, Denmark is only a fraction of the size of the region’s “big five”: Germany, France, the UK, Spain and Italy.

But the country is leading the way in other respects. After the Netherlands and the “microstates” of the Faroe Islands and Gibraltar, Denmark has the highest level of broadband take-up in Western Europe. At the end of 2008, eight out of 10 Danish households were subscribed to broadband, compared with about six out of 10 in France, the UK, Germany and Spain, and just over four out of 10 in Italy.

And although next-generation broadband is only just beginning to arrive in many Western European countries, fiber-to-the-home/building services have been available in Denmark since about 2004. So you could say Denmark offers a glimpse of how other, larger broadband markets might behave once they become as advanced.

Now back to the chart. It shows how the number of subscriptions to different types of broadband services in Denmark changed over 2008. The first thing you’ll notice is that 4-8Mbps speeds are the most popular, despite the widespread availability of “superfast” fiber-based broadband services. This will come as no surprise to regular readers of Informa’s research, as we have long been skeptical about people’s willingness to pay for tens of megabits of extra bandwidth they will find little use for.

But read from left to right, the bars seem to bear out a belief common among many broadband providers: “Speed sells.” The number of subscriptions to services slower than 256Kbps appears to have been in decline long before 2008, while those services offering between 2Mbps and 4Mbps began to suffer heavy losses in the latter part of that year. The next few bars show the market for 4-10Mbps speeds growing steadily throughout 2008, and demand picking up for 10-20Mbps speeds in the second half. It’s not hard to imagine this “wave” of demand for ever faster services making its way across to the right of similar charts for 2009, 2010 and beyond.

But something interesting is happening in the far right-hand corner of this latest version. The number of subscriptions to both 50Mbps and 100Mbps-plus services began to decline in the last six months of 2008. Why? FTTH operators throughout the fiber-rich Nordics have told us that few consumers see the need for such extreme speeds. Now it seems that even some of those few have had their doubts and have downgraded to lower speeds, in Denmark at least. So much for the allure of speed.

The picture gets even more interesting when you examine which types of providers have benefited the most from the changing tastes of the Danes. The FTTx providers did relatively well in 2008, increasing their broadband market share nearly 2.2 percentage points as both the Danish incumbent, TDC, and the country’s cable operators shed subscribers.

But unbundled DSL made the most gains by far. This was partly because established operators migrated their subscribers from services based on TDC’s wholesale platform to more-profitable ones based on their own unbundled lines. The biggest contributor, however, was a relative new entrant. Fullrate entered Denmark’s broadband market toward the end of 2006 and consistently attracted more new subscribers than any of its competitors throughout 2008. Fullrate’s pitch? Low-priced, no-frills broadband at a range of DSL speeds.

To be fair, there have also been some signs that Danish customers aren’t interested only in paying less. Some would like to see broadband services move “sideways” to include new features, such as mobility, voice and TV. Mobile broadband services based on USB dongles and laptop data-cards attracted three times as many new customers as fixed-line broadband services in 2008. TDC also claimed to have signed up more than 50,000 subscribers to its Home dual- and triple-play bundles of broadband, fixed-line telephony and IPTV in the first few months of this year.

But I suspect TDC knows its bundling strategy is more of about the power of discounts than the convergence of telecoms and media. And to use another old saying, the incumbent’s actions speak louder than words. In March, it acquired Fullrate. TDC seems to know that whatever direction broadband services head off in, many customers will always be happy to see prices go down.

Lycamobile rolls out MVNO in Italy

International MVNO Lycamobile has launched services in Italy, piggybacking on the network of disruptive 3G carrier 3 Italia.

The service provider has announced the launch of a prepay SIM card, available at over 65,000 retail outlets from this week.

In keeping with its target market of migrant workers, international calls are priced from €0.09 per minute, with national calls from €0.15 per minute. On net Lycamobile to Lycamobile calls are free for the first 15 minutes, and a promotional campaign will also offer free text messages to anywhere in the world until the end of July.

Lycamobile has launched its prepaid SIM only MVNO services in the Netherlands, Belgium, Norway, Sweden, Denmark, Switzerland and the UK, with almost four million subscribers in total.

3 Italia is the smallest mobile operator in Italy, with 8.88 million subscribers at the end of March. TIM (Telecom Italia) heads up the market with 34 million users, followed by Vodafone with 27 million and Wind with 17 million.

Europe pushes for DMB mobile TV rollouts

Five European countries this week established a coalition to push mobile TV services over the DMB and DAB network standards.

The International DMB Advancement Group (IDAG) was founded by representatives from the Netherlands, Norway, the UK, Malta and Italy, with the goal of promoting TV, radio and data services via DMB, DAB and DAB+ with a nod towards enhanced functionality via other networks, such as 3G and wifi.

The group said it will focus on creating a bigger Pan-European market for DMB terminals through purchasing partnerships, collaborations with other companies and organizations, coordination of technical solutions and the development of business models.

“IDAG helps create a much bigger market for DMB related devices and services across Europe and beyond. The members will support each other’s services, ensure faster experience sharing and save time and money on coordination of systems and processes,” said Gunnar Garfors, president of IDAG and CEO of broadcaster NMTV, one of the members.

Last month Norway’s three biggest broadcasters announced the successful launch of six free-to-air TV channels via DMB.

The service, launched by the Norwegian Mobile TV Corporation (NMTV), is a joint venture between the Norwegian Broadcasting Corporation (NRK), TV 2 and Modern Times Group (MTG).

Licence-funded broadcaster NRK said that DMB is seen as the best technology in Norway due to its cost efficient coverage of large and rural areas. DMB receivers are also compatible with DAB digital radio that is available to 80 per cent of the population in Norway.

By using a MiniTV receiver or compatible mobile handset, the free-to-air channels can be received in and around Greater Oslo while on the move.

The TV channels on offer are NRK1, NRK2, NRK3, TV 2, TV 2 News 24 and Viasat TV 3. A further 15 DAB digital radio channels can also be received by all DMB handsets, and additional services providing interactivity, traffic information and on demand programmes will be offered later in 2009.

NMTV’s DMB licence is valid until July 2011 and may be lengthened if the initial period proves a success. Public service broadcaster NRKs channels will remain free to air throughout the period, while the commercial owners TV 2 and MTG are planning to introduce pay TV channels.

With pricing seen as one of the main obstacles, mobile TV has largely failed to gain traction outside of Japan and South Korea, where the free to air terrestrial TV model has proved popular, so it will be interesting to see how well Norway’s offering is received. The Netherlands and Malta will launch DMB services later in 2009, while Italy and the UK are currently testing DMB on a smaller scale.

Italy’s Telecom Italia has announced plans to cut costs by around Eur2bn in 2009, as well as offload non core assets to the tune of a further Eur3bn. Part of the restructuring plan includes the slashing of a further 4,000 jobs in Italy.

Under the Italian operator’s 2009-2011 plan, 40 per cent of the targeted cost efficiencies will be achieved in 2009, through network operations, building and energy simplifications; sales and distribution and customer operations programmes; and general organisation streamlining.

Non core assets, which fall outside the scope of the business plan, will be offloaded to contribute a further Eur3bn in cash flow.

At an event in London on Wednesday, Telecom Italia CEO Franco Bernabe, said: “The conditions that have since emerged on the market and in the real economy mean that it is necessary to be even more incisive in our priority of debt reduction. In the light of our results, which in the meantime have shown a slow down in margin erosion, we are now in a position to move forward with this three-year plan confirming the path we went through in recent months.

We will strive even harder to keep operating costs and investments in check, maintain a business with a scope that matches our current needs, and pursue our target of bringing down debt to around 2.3 times our EBITDA.”

Bernabe said future growth is expected to come from Italy and Brazil, and to a lesser degree, from Argentina.

In its domestic market, the carrier plans to drive growth in revenues from broadband, which it expects to account for 28 per cent of overall domestic revenues by 2011. The approach will be customer centric, with a focus on Quality of Service, Value Added Services, the development of IPTV, online advertising and digital home services, as well as the development of mobile broadband.

The group’s brand will also be revised to promote this customer centric approach as well as the company’s more convergent offerings.

In Brazil, the company intends to exploit the opportunities arising from fixed to mobile substitution, as well as using mobile as a broadband growth enabler. Telecom Italia forecasts more than 2.5 million mobile broadband customers by 2011, and an estimated market share in this sector of around 25 per cent.

In Argentina, TIM intends to expand its presence by exercising a call option to increase its shareholding in Sofora. This will be undertaken with the support of a local partner and will not require Telecom Italia to make any financial investment, the company said.

“Geographically, our growth will come from Italy and Brazil, without neglecting the Argentinean telecommunications market. Our business plan focuses on new services and enabling functions over fixed-line and mobile broadband. On the domestic market, our focus is on a new customer-centric approach, which is why we will be launching a new macro-organization starting from January 2009. We will continue to boost innovative businesses, as we work to promote wide-ranging development of the digital economy. We will also be updating and significantly rationalizing our brand architecture in 2009 to offer increased support for our range of convergent services,” said Bernabe.