Bharti acquires 49 per cent stake in Qualcomm's India unit for a mere $165m

India’s Bharti Airtel has signed an agreement with Qualcomm to acquire 49 per cent of its Indian BWA entities.

Qualcomm acquired the wireless broadband service permits in India for four states in the country in 2010 for $1bn. The purchase was made in a deliberate bid to block the progress of WiMAX as an alternative 4G technology in the country, Qualcomm CEO Paul Jacobs said at the time. Now, it has sold the 49 per cent stake to Bharti for just $165m.

Bharti is acquiring its stake by purchasing a 26 per cent share held by two Indian partners in the Qualcomm broadband venture, Global Holding Corporation and Tulip Telecom and by subscribing to fresh equity. Once commercial operations are launched, subject to certain terms and conditions, the plan is for Bharti to assume complete ownership and financial responsibility for the BWA entities by the end of 2014.

“This partnership will combine the strength of Bharti’s national telecom footprint and Qualcomm’s technological leadership in the LTE TDD space,” said Sunil Bharti Mittal, chairman and managing director, Bharti Airtel.  With a broadband ready network across India, Bharti is well positioned to lead the next phase of Indian’s telecom revolution.”

Paul Jacobs added that one of the firm’s key objectives has been to include a strong partner in the Indian venture with the scale, experience and resources to deploy LTE TDD networks.

“GHC and Tulip have been great partners in facilitating this transaction. Qualcomm remains dedicated to the continued progress and success of the BWA venture and to fulfilling our commitment as a key equity stakeholder,” he said.

Qualcomm’s licences cover Delhi, Mumbai, Haryana and Kerala, and Bharti already has BWA licences of its own in four circles: Kolkata, Karnataka, Punjab and Maharashtra, as well as and 3G licences in thirteen circles. It has already launched 4G services in Kolkata and Karnataka.

Qualcomm said that it expects to provide technical assistance to Bharti in connection with network architecture and optimization, infrastructure and device testing, as well as continuing to develop and support the underlying technology and the LTE TDD ecosystem.

Verizon, TeliaSonera and Qualcomm were each buoyed by their quarterly results

Operators Verizon and TeliaSonera, as well as chipmaker Qualcomm have each posted encouraging quarterly earnings.

US carrier Verizon saw a 7.7 per cent year-on-year in service revenues for 1Q12 to reach $15.4bn. Data revenues rose by 21.1 per cent, or $1.1bn, to hit $6.6bn, and the operator also saw a 8.9 per cent increase in retail service revenues to reach $14.9bn; the highest growth rate it has seen in its retail business for three years.

“We built momentum coming out of 2011, and our results show that we continue to execute in the key growth areas of our business,” said Lowell McAdam, Verizon chairman and CEO.  “We are on track with our plans and expect to continue to deliver strong results.”

Meanwhile, Sweden’s TeliaSonera revealed that its net sales in local currencies and excluding acquisitions increased by 2.9 per cent in its first quarter of 2012. However, net income fell by 15.9 per cent to SEK 3.9 bn ($576m).

Lars Nyberg, TeliaSonera’s president and CEO said that the operator’s organic growth rate improved in the first quarter compared with previous quarters.“Eurasia continued to deliver double-digit growth, while revenues in broadband services were almost at the same level as last year. In mobility services, the growth was mainly driven by equipment sales.”

He added that changes in customer behaviour means that the firm must develop its business models and how it charges for services going forward.

“We have been in the forefront stating that while prices for voice will continue to come down there must be a stronger correlation between usage and pricing of data. We have been early in introducing tiered pricing of data, lower costs for data roaming and recently openly communicated that we will start to charge for mobile VoIP.”

And Qualcomm, which has just completed its second quarter of 2012, posted a 28 per cent year-on-year increase in revenue to reach $4.94bn. Operating income stood at $1.51bn, up six percent on 2Q11 and the firm’s net income grew 123 per cent to reach $2.23 billion.

“I am pleased to report another quarter of record revenues and earnings per share, driven by strong demand for 3G- and 4G-enabled devices across both developed and emerging regions,” said Dr Paul Jacobs, chairman and CEO of Qualcomm. “We are excited to see the continued growth of 3G and 4G smartphones, as well as new mobile computing devices. We are increasing our operating expenses to facilitate additional 28 nanometer supply and to continue to position our industry-leading chipset solutions for the opportunities ahead.”

What a difference a year makes…

OWD is a new open standards HTML 5-based platform

Telefónica Digital has announced a new deal with Firefox browser-maker Mozilla on the first day of Mobile World Congress 2012. The two firms have collaborated to create a new mobile platform, which will see a host of HTML 5 based devices running on the open web entering the market.

The Open Web Devices platform (OWD) is set to launch in 2012, although no specific date has been mentioned. The two companies claim that the platform will enable smartphones running HTML 5 applications to enter the market at low price points.

Telefónica Digital, which was formed just last year, said that its product development and innovation team worked closely together with Mozilla, which has pioneered open web standards, to create a new phone architecture that relies entirely on the web, enabling HTML 5 applications with access to core phone APIs. This means that all of the device’s capabilities, such as calling, messaging, browsing and games, can be developed as HTML5 applications and accessed through the Firefox web browser.

The reference implementation will be submitted for standardization to W3C international open source community, in line with the initiative’s commitment to openness. The two firms said that there are no proprietary APIs within the device architecture, making phones developed using it truly open devices.

The operating system is built on a hardware platform based on a Qualcomm chipset. The three companies will be collaborating to deliver a feature rich prototype platform that will enable smartphone capabilities at feature phone entry level pricing.

“It has long been our mission to deliver advanced web technologies that eliminate roadblocks for users and developers,” said Brendan Eich, CTO at Mozilla. “By providing the missing links, Mozilla is now unlocking the power of the web as the platform for creating and consuming rich content everywhere.”

NSN and Qualcomm to demonstrate HSPA+ Multiflow at MWC

Operators will soon be able double mobile broadband speeds for consumers at the edge of a base station cell, by allowing devices to connect with a second base station that serves a neighbouring cell, Nokia Siemens Networks has said.

NSN and Qualcomm will be jointly demonstrating the HSPA+ Multiflow feature at Mobile World Congress in Barcelona, next week.

The feature enables the simultaneous transmission of two data streams from two adjacent cells to one single consumer device. Currently, technology on the marketonly enables one data stream to be transmitted to a device from one base station, except for when a user is moving from one cell area to another, when the consumer can benefit from a “soft handover”.

However, NSN claimed that HSPA+ Multiflow can up to double throughput and data speeds for users at cell edge and provide up to 50 per cent faster response compared to existing HSPA+ networks.

The feature is expected to be 3GPP standardised by mid-2012, and will be available commercially from NSN by second half of 2013. Operators will be able to add the feature to their existing HSPA networks with a simple software upgrade, according to the infrastructure vendor.

Kyobo's Mirasol-enabled e-reader

An E-reader launched by South Korea’s largest book retailer, Kyobo, has become the first device featuring a Qualcomm-produced colour Mirasol screen to go on sale. Mirasol display technology, developed by wholly-owned subsidiary Qualcomm MEMS, offers significant reductions in screen power consumption, as well as improved visibility in daylight.

The technology, which is based on the same principles that create the shimmering effect on the wings of butterflies, has been in development for a long time. The firms are claiming that, depending on ambient light conditions, the device will “weeks of reading” on a single charge.

“Kyobo is a recognized content leader focused on bringing unique and innovative experiences to its customers,” said Clarence Chui, senior vice president and general manager of Qualcomm MEMS Technologies, Inc. “Kyobo’s customers will be the first to enjoy the exceptional color e-reader experience and long battery life that only mirasol displays can provide.”

Qualcomm made little fanfare around the first commercial appearance of the new technology, and Ovum analyst Nick Dillon suggested that Mirasol has proven more complicated than Qualcomm initially expected and that it wants to launch it as softly as possible.

“I think it’s clear that the technology has been trickier to develop than Qualcomm first envisaged, given the time it has taken to come to market,” Dillon said. “I think they are using the Kyodo product as a soft launch to test it out and to try and generate some interest form other manufacturers.”

Dillon said that the technology is not yet at the stage where it can offer comparable colour and video performance to the TFT and LED screens that dominate the current mobile device market. But as it improves, Mirasol will likely be deployed in smartphones and tablets, he said. “It should lead to some interesting new products,” he added, “there is definitely room for innovation in this area.”

Qualcomm's Gobi 4000 could be the integrated LTE/3G chipset that Apple is waiting to include in the iPhone 5

Chipmaker Qualcomm has announced the Gobi 4000, its first integrated chipset that supports LTE and various 3G flavours such as HSPA+, dual-carrier HSPA+, CDMA2000, and 1xEV-DO Rev A and B. The chipset package, which consists of the MDM9600 and MDM9200 chips, is the first integrated 3G/LTE chipset available from Qualcomm, which should bring the increasing efficiency and improved packaging that has prevented Apple from introducing LTE into the iPhone 4GS.

Apple uses Qualcomm previous generation chips for the baseband of its current iPhones and the 3G enabled iPads, making it likely that the new chips will provide a straight upgrade path to an LTE capable iPhone 5 and iPad 3.

According to Cristiano Amon, senior vice president of product management for Qualcomm, the Gobi 4000 chipset will offer, “an uncompromised mobile connectivity experience, both in terms of download speeds and flexibility.” The company said that Gobi 4000-based modules are now available from Novatel Wireless and Sierra Wireless.

While there are many LTE enabled handsets on the market, these involve using a separate 3G and LTE chipsets, which results in an poor battery life, a fact recently criticised by Tommy Ljunggren, head of system development at TeliaSonera in an interview with Telecoms.com, who described them as, “basically a dongle and phone that they glue together. They work – just not for long.”

Ljunggren also said that LTE in the iPhone 5 would be was essential if Apple was to maintain its market share. “It will be a bad mistake not to include LTE in the iPhone 5, as otherwise they will really be run over by the others.”

The Californian silicon and IP player saw revenues for the final quarter of its fiscal year up by 39 per cent year on year to $4.12bn, with profits up 22 per cent to $1.06bn. Profit for the full year hit $4.26bn on revenues of $14.96bn, an improvement over the previous year of 31 per cent.

Head honcho Paul Jacobs credited the growth in demand for smartphones as well as the strength of the firm’s legendary patent portfolio for the performance, predicting further growth of up to 27 per cent for the upcoming year. Revenues should hit between $18bn and $19bn, he said.

The firm clearly doesn’t expect any negative impact from the news that Nokia has offered a lifeline to ST-Ericsson, announcing that it’s planning to use the chip player’s NovaThor platform in Windows-based smartphones at some stage in the future. But Ovum analyst Nick Dillon poured cold water on the announcement, pointing out that WP7 doesn’t support dual-core chipsets like the NovaThor, with Microsoft having announced no plans to change this state of affairs.

Nonetheless, Dillon said that in time the deal would prove to be a “huge win” for ST Ericsson, especially if Nokia is looking in time to end its reliance on Qualcomm silicon altogether.

Meanwhile profits were declining at Indian and pan-African operator Bharti Airtel. Profits for fiscal Q2 were down by 38 per cent to $225m, the carrier said, partly due to currency fluctuations and the strength of the US dollar against currencies in the African markets where it operates. Zain, which sold Bharti all of those African properties, has been enjoying slightly more positive times, with a seven per cent increase in profit for the first nine months of 2011, hitting $762.5m.

Perhaps the Zain African portfolio is a bit like the video tape in cult Japanese horror flick The Ring. So long as you can pass the curse to somebody else, you’ll survive.

The same cannot be said for WiMAX, largely because nobody else seems to want to take it on. Israeli player Alvarion, which has carried the WiMAX can for what seems like more than its fair share of the relay, had more bad news this week, with the announcement that Q3 revenues were down year on year to $47m, with losses increasing to $7.5m from $6.1m a year ago.

Alvarion decided to console itself with the acquisition of a company with a vaguely similar name. Fellow Israeli outfit Wavion, develops wifi applications, and became part of the Alvarion stable for $30m in cash.

On the handset side of the fence, Motorola Mobility, which Google recently snapped up for an eye-watering $12.5bn, last week reported a shrinking net loss, but this week revealed plans to lay off around 800 workers, costing around $34m in related costs.

European and Latin American carrier Telefónica is doing some slashing of its own in a bid to keep future costs down. Matthew Key, former head of Telefónica Europe and current head of the newly formed digital unit, said the operator currently offers more than 240 handsets worldwide, of which just 12 are common in every market, but aims to cut that number down to less than 100. The move comes as part of a wider efficiency drive, and aims to allow the operator enhanced freedom to develop new products and services within its digital division.

The Informer recently saw Key talking about a “mindset shift” that would come about as a result of the creation of Telefónica Digital, during which he said: “The biggest factor in this mindset shift is that we have to move into the future and not protect the past. We can’t operate in a walled garden, we need to create the right products for people.”

With one eye on the future Korean vendor Pantech will be launching its Vega handset in South Korea this month, utilising gesture recognition technology provided by Israeli firm eyeSight. The device will enable users to answer incoming calls, activate their MP3 players, play games, and perform other tasks using simple hand gestures and without actually touching the screen.

Meanwhile, Samsung has confirmed that it will be launching a smartphone with a flexible screen in 2012. The firm has been showcasing its flexible Super-AMOLED displays since last year and company spokesman Robert Yi confirmed in an earnings call that products utilising the technology will be on sale next year.

There was more future gazing from Square, the payments startup founded by Jack Dorsey of Twitter fame, which is working on a ‘pay by face’ functionality for its platform. The system knows which store you are in from the location of your phone, delivers your photo to the shopkeeper and allows him to verify you by confirming you are the person in the photo. Transaction complete.

Visa Europe meanwhile, has invested £24.7m in mobile payments platform Monitise, giving the latter a greater European presence through an 8.8 per cent holding in the firm. Visa Europe president and chief executive Peter Ayliffe, will join Monitise’s board of directors, and said that that the growth of mobile phone services and e-commerce, together with the evolution of the mobile handset into the smartphone, present two of the most significant opportunities for the payments technology industry.

In September, Visa Europe announced the launch of Visa Mobile Person-to-Person payments and Visa Alerts, two services designed to help consumers manage their money and make payments using their mobile phones. Monitise was involved in both initiatives.

Rounding up now and something the Informer’s long suspected – 97 per cent of all the traffic travelling through the network of mobile operator 3UK today is data. The carrier said that in the 14 months between June 2010 and September 201, it has seen a 427 per cent increase in data usage for smartphone customers. Phil Sheppard, director of network strategy at 3UK, said that the operator’s focus has primarily been on users’ online experience and that its 3G network was made for the mobile internet.

Perhaps pushing a solution to the “too much data on the network” problem, Nokia has teamed up with wifi network operator Spectrum Interactive and location based media firm Selective Media, to trial a free wifi offering on the streets of London.

The trial project, which runs until the end of 2011, takes advantage of 26 London hot spot locations from Spectrum Interactive’s portfolio of real estate, most of which will be based on payphone boxes. It’s intended to assess both the demand for free wifi access and the browsing behaviour of consumers using the service across the British capital. The hotspots are typically fed by a 20Mbps DSL backhaul link, while individual users will allowed a 1Mbps connection in order to keep bandwidth hogging down.

Usage will be unrestricted across devices, browsers and apps, with users confirming a terms and conditions check box before access is granted. Following a successful trial, Nokia said plans are in place for a large-scale rollout across London from early 2012.

The question remains as to how this initiative is monetised, which is where Chris Bull, founder of Selective Media, comes in, saying that mobile advertising is on the agenda. Presumably the reason for allowing open access to start with would allow Selective to build up an idea of who is using the service and what they’re using it for. The firm would then be able to use its ad network to serve appropriate ads to popular sites.

That’s about the size of it for this week

Take care

The Informer

Qualcomm reports stellar results for 2011

Chipmaker Qualcomm has announced a sharp increase in revenue and profit in its financial results for its final quarter and year ending September 25, 2011.

The firm saw its revenue rise to $4.12bn for the quarter, an increase of 39 per cent year-on-year and up 14 per cent on the previous quarter. Net income for the quarter stood at $1.06bn, a rise of 22 per cent year-on-year and two per cent consecutively.

Overall for the full year, revenues stood at $14.96bn – a 36 per cent increase on FY10, while net income also climbed by 31 per cent to $4.26bn.

Paul Jacobs, chairman and CEO of Qualcomm, stated that the popularity of smartphones, continued adoption of 3G technologies and its patent portfolio drove record revenues, earnings and MSM chipset shipments for the firm.

He added that the firm expects revenue for 2012 to reach between $18bn and $19bn – which would mark an increase of 20 per cent to 27 per cent on 2011 – and would surpass Wall Street expectations.

“The breadth and depth of our chipset roadmap, extensive licensing program and diverse set of global partnerships position us well for strong revenue and earnings growth in fiscal 2012,” he said.

“We are excited about the upcoming commercial launch of our groundbreaking Snapdragon multimode LTE solution and continue to invest in and execute on our strategic priorities to drive profitable growth.”

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Watch Qualcomm discuss video over wifi at Broadband World Forum 2011

When Netflix decided to separate DVD delivery from its video streaming service, consumers rebelled. Many dropped both services and the company lost half its value on Wall Street. Trouble like this is commonplace for cable TV and satellite providers, which, according to the American Customer Satisfaction Index (ACSI), both consistently rank low in customer satisfaction surveys.

The ACSI found that for the first two quarters of 2011, “higher fees are significantly dampening customer satisfaction [for cable and satellite TV service], more so than in other industries.” J.D. Powers drew a similar conclusion, finding that customer satisfaction for all TV services fell in 2010.

Price dissatisfaction is only one of the challenges facing TV service providers today.

An even more pressing problem is the fact that consumers are turning to the Internet for more and more rich media. Consumers want instant availability to content on any device, at any time and with the ability to switch from device to device on the fly without interrupting the service. But, the two devices that could potentially manage this device-to-device sharing, the set-top box and wifi gateway, weren’t designed to deliver multiple video streams over wireless connections. This results in a poor user experience.

As a result, consumers are starting to drop traditional cable TV services in favor of on-demand – or pirated content available on the Internet – and a new set of equipment. Consumers, and especially those in the under-30 demographic, simply aren’t satisfied with dated video delivery models.

“Why am I paying $100+ each month for 200+ channels when I only watch HGTV, the Travel Channel and sports?” they ask. “And why can’t I watch the shows I recorded on my DVR on my iPad or Android phone?”

Pay TV Delivery Model Fails to Keep Up with Consumer Preferences

Of course, one of the ways TV service providers respond to customer dissatisfaction is to point to the poor performance of online video. Netflix streams drop and its streaming catalog is growing, but still in the infancy stage. Hulu has limited content and suffers from the same performance issues as Netflix. YouTube is rife with useless and low-quality videos. Illegal BitTorrent videos take forever to download.

Consumers put up with these problems, though, because the price is right – anywhere from free to less than $10 per month. As the price rises, though, say for something like MLB.TV (Major League Baseball), consumers won’t settle for poor performance online any more than they do with cable or satellite TV.

In a pinched economy, the pressure to deliver only the content customers want will become increasingly important. If consumers can get what they want from online streaming and pay-per-view services, while saving money each month, they’ll opt for the flexibility and cost savings en masse. Meanwhile, cable TV and satellite providers may permanently lose their pathway into the home.

High Setup and Support Costs Apply Even More Pressure, Opening the Door to Google or Amazon?

Now, let’s throw yet another wrench into the mix: HDTV. Everyone wants HD streaming, and this demand is even more pronounced among early adopters. Consumers are seeking providers who can deliver HD content to any device, anywhere in the home, and with performance on par with or better than classic cable TV service. If TV service providers don’t think ahead and prepare their offering for this new demand someone else (Google? Amazon? A recovered Netflix?) will come along and steal their business. If past history foretells the future, an offer of a new and more attuned service at a lower price point often results in the demise of the established providers. Trying to ward off competitors using your existing model cannot be a viable strategy in a free market when your customers are crying for change.

The Way Forward: Video over wifi

Today, set-top boxes/DVRs are the hub of video services. An increasing number of savvy consumers dislike these devices, since they know that most new HDTVs have the computing power to make these set-top boxes unnecessary. Meanwhile, DVR functionality tends to be low, with most service providers actually dumbing down the devices by shutting down services and blocking peripheral ports. Thus, in-the-know consumers chafe at paying $15 each month for what is essentially an overpriced, underperforming storage device.

Set-top boxes could conceivably rebound to serve as a hub for video sharing, but most consumers want their content centralized on a device with better sharing capabilities, such as the home gateway. As content shifts away from set-top boxes, wifi gateways will become ever more important.

Unfortunately, today’s installed wifi networks aren’t quite ready for the coming “my content, my way, my device” consumer wave. Today’s gateways don’t yet enable you to start watching a program on your HDTV, before bumping it over to your netbook on the kitchen table and onwards to your iPad as you head to the basement to check on the laundry.

That doesn’t mean this is not technically feasible. It is. New high-capacity, multi-stream capable wifi solutions are starting to hit the market, and some of the major service providers have already expressed the intention to cash in on this new opportunity.

The opportunity for Video over wifi is huge. New, robust wifi solutions can stream content from Internet video services, direct content to be consumed later to appropriate consumer-picked storage depositories, facilitate in-house device-to-device sharing, and even enable carrier-approved P2P sharing to overcome network bottlenecks.

wifi gateways can even help providers lower opex and support costs. New customers will be able to log onto online self-service portals to get setup, and once service is established, carriers will have a better ability to remotely monitor service quality and troubleshoot without sending a service truck.

Is interference from a microwave oven causing an iPad in the kitchen to drop video streams? Onboard diagnostic tools in the wifi gateway will help remote technicians pinpoint the problem at a fraction of the cost of today’s cable or satellite service calls.

Let’s face it: the most important cable into the home these days is the broadband connection. Number two probably isn’t a cable at all, but rather cellular service. Cable and satellite TV services are a distant third. With carriers bundling services anyway, TV service providers would be well served to set their sights on the right cable into the home and the right box (the wifi gateway) to keep up with consumers’ changing behaviors.

Whichever cable TV or satellite provider, or whichever newcomer like Amazon, Google or Apple, figures out how to wirelessly stream multiple video services to multiple devices at once will be able to differentiate itself from competitors in a market where consumers often have trouble seeing any difference from one service provider to the next.

The first TV service provider to meet this challenge won’t have to answer the question of “Why am I paying so much for these services?” Customers of this forward-thinking provider will have a vast range of new services at their fingertips, services better tailored to meet their evolving consumption demands, and services for which they’ll be willing to pay.

Patrick Ribardiere is director of product management with a focus on carrier technologies in the networking business unit at Qualcomm Atheros.

Sources:

1. Netflix debacle: http://www.boston.com/business/technology/articles/2011/09/19/netflix_separates_its_dvd_streaming_businesses/?camp=obnetwork

2. Cable/satellite customer satisfaction survey: http://www.theacsi.org/index.php?option=com_content&view=article&id=246&Itemid=291

3. A good overview of cable TV satisfaction surveys: http://www.fiercecable.com/special-reports/cable-customer-service-struggles-climb

4. JD Power’s survey: Customers of traditional cable providers are particularly dissatisfied with their cost of service. (**NOTE: Last year this study came out on 10/6, so we may want to update this at the last minute.) http://businesscenter.jdpower.com/news/pressrelease.aspx?ID=2010166