Spain's CNC has opened disciplinary proceedings against three operators

Spain’s antitrust regulator, the National Commission Competition (CNC) has taken disciplinary action against Telefónica, Vodafone and Orange, accusing the operators of abusing their dominant positions.

CNC has opened legal proceedings against the operators after a complaint was filed by UK carrier the BT Group. The complainant claims that the operators have been squeezing out the profit margins of virtual mobile operators, which don’t own their own network.

“The complaint alleges that the operators have committed an abuse of their dominant positions,  individually or collectively, by consistently narrowing the operating margins for MVNOs when setting prices for wholesale services  origination and call termination in their national telephone networks  mobile, and retail prices for mobile call services, especially in the business segment,” CNC said in a statement.

The regulator added that the probe must be closed within 18 months.

The big three won out in the LTE auction

Spain’s leading carriers shelled out more than €1.65bn between them in the latest round of LTE spectrum auctions to take place in Europe. Telefónica, Orange and Vodafone walked away with spectral spoils in the 800MHz and 2.6GHz band after an auction process last week.

Vodafone is the only operator to have been forthcoming about its plans, announcing it had won a total of 60MHz (2x30MHz) of new spectrum – 20MHz (2x10MHz) in the 800MHz band and 40MHz (2x20MHz) in the 2.6GHz band for a total consideration of €518m.

The 800MHz ‘digital dividend’ spectrum will become available in 2014 after the switchover from analogue to all-digital TV broadcasting in Spain. The 2.6GHz spectrum band is immediately available for use.

Vodafone Spain will also begin to offer 3G mobile internet access to customers in rural areas by the end of 2011 after receiving approval from the Spanish government to re-farm spectrum in the 900MHz frequency band currently used for 2G services. The Company has already begun to deploy versatile single Radio Access Network (RAN) base stations designed to handle 2G, 3G and LTE technologies on a common shared platform.

Spain is hoping its spectrum auction will help it raise nearly €2bn

Spain has begun its wireless spectrum auction process with operators bidding to take a chunk of the valuable radio waves that will be used to provide next generation mobile services. The Spanish government hopes the auction will raise €2bn (US$2.9bn), which would help Spain reduce its heavy budget deficit, which is currently the third largest in the EU.

Telefonica, Vodafone and France Telecom are the three biggest players taking part in the auction, but a total of 11 companies are involved in the process. 270MHz of spectrum is up for grabs, with 58 blocks available in the 800MHz, 900MHz and 2.6GHz frequency bands. The intention is to boost competition with smaller operators gaining access to spectrum, in the hope that it will lower end user prices and raise network quality.

The results will be known 10-15 days from the start of the auction the Spanish Industry Ministry told news agency Bloomberg. Reports of the latest bids will be posted on the ministry’s website, indicating the price and the blocks auctioned, without providing the name of the operators.

Spain’s auction takes place ahead of those in Italy and Switzerland, with the UK’s scheduled for early 2012.

France recently began its spectrum auction process but the process has been dogged by reports that its LTE network could block digital terrestrial television, with Bouygues Telecom suggesting that LTE licensees pay compensation to viewers whose service is interrupted. In the UK, a report from regulator Ofcom suggested that correcting potential interference from LTE base stations could cost as much as £100m.

The EU is set to take legal action against France, Spain and Hungary over telecoms taxes

France and Spain are to be taken to court by the EU over telecoms taxes. According to reports from Reuters, the EU executive will take legal action over taxes imposed on telecoms companies aimed at compensating for the end of advertising on public television stations.

An unnamed source has said that such taxes are deemed to be incompatible with EU telecoms rules, which require specific charges on telecoms operators to be directly related to meeting the costs of regulating the telecoms sector. The EU further requires that any such taxes be “objective, transparent and proportionate.”

In France, the tax was introduced in March 2009 following a government decision to end advertising on public broadcaster France Televisions. Spain followed suit with a similar levy in September 2009. Hungary, which also introduced a telecoms tax in October last year, will also face proceedings. According to Reuters, both France and Spain impose a tax of 0.9 per cent of the total turnover of telecoms companies that operate in their territories, generating revenues of €400m in France and €230m in Spain.

Kantar’s ComTech consumer tracking panel conducts more than two million consumer interviews across 11 key mobile markets each year, gaining insight into mobile phone behaviour, including purchasing of phones, mobile phone bills/airtime, source of purchase, phone usage and handset features.

The latest data shows that Vodafone has the highest percentage of customers using the most advanced services, consistently above the average. Seven per cent of the firm’s Spanish customers have used their phones for internet browsing and downloading and sending pictures. Eight per cent have used it to play games, while 11 percent have used their phone to make videos. Music has proven the most popular service among the carrier’s customers, with 15 per cent of them using their phone to listen to music.

Vodafone’s relative success with non-voice services is reflected in its ARPU, the ComTech survey shows. Figures for this year give Vodafone a contract ARPU of €30.23, compared to Orange on €27.70 and Telefónica (Movistar) on €28.08. Vodafone also leads the way in prepaid ARPU with €19.76 compared to €18.15 for Orange and €16.93 for Telefónica.

Vodafone is benefiting from a younger subscriber base, with 43.1 per cent of its customers in the 16 – 34 year-old age group. The average across all networks is 36.5 per cent, with Telefónica having 32.8 per cent and Orange 38.2 per cent. However, the survey data shows that, even among this age group, Vodafone enjoys a significant lead over its competitors in terms of non-voice service usage. A higher proportion of advanced handsets among Vodafone’s 16 – 34 year-old age group is a key factor in this, the survey data suggests. 69 per cent of Vodafone’s customers in this demographic have a 3G handset compared to 48 per cent for Telefónica and 59 per cent for Orange.

Kantar Worldpanel

ComTech is the largest continuous research consumer mobile phone tracking panel of its kind in the world, conducting over 1 million interviews per year in Europe alone. The study has now been expanded to Mexico, Brazil, Japan, Australia and the US , bringing the total number of annual interviews to over 2 million. Worldpanel ComTech tracks mobile phone behaviour, including purchasing of phones, mobile phone bills/airtime, source of purchase, phone usage and handset features and delivers beyond market share tracking to understand drivers of share changes, market dynamics through consumer insight – the data included in this story is excluding enterprise sales.

Telefonica bolsters IPTV offering with Digital + buy

Spanish carrier Telefonica said Wednesday that it has agreed to acquire 21 per cent of local satellite TV player Prisa, which operates under the Digital + brand.

At a price of €470m, Telefonica will get access to Digital +’s pay TV services, giving it access to content for its own Imagenio IPTV offering.

Under the deal, the two companies also formed a framework collaboration agreement to explore “potential co-operation in fields regarding audiovisual development, and other services of both companies, in Spain.”

Meanwhile, Telefonica has collared infrastructure firm Nokia Siemens Networks (NSN) to sort it out a six month long LTE trial for its O2 operation in the Czech Republic.

Telefonica is now running LTE test projects in six countries, with a view to selecting technology providers for its 4G deployments. Last month, the operator tapped up Alcatel-Lucent, Ericsson, Huawei, NEC, NSN and ZTE for test networks in Spain, the UK, Germany, the Czech Republic, Brazil and Argentina.

The Spanish firm reckons its will be able to offer peak speeds of up to 340Mbps in ideal conditions using LTE, exploiting benefits from more flexible spectrum management, increased efficiency through greater operating automation and the mass adoption of the technologies such as MIMO.

The MiFi mobile broadband hotspot

Vodafone has confirmed plans to deploy the MiFi mobile broadband hotspot in three markets but may face a challenge in marketing the device to end users.

The concept of a mobile broadband hotspot is gaining traction in the tech world, but may be a difficult one to pitch to consumers. The MiFi, manufactured by Novatel, is a pocket sized box powered by batteries or a mains supply and can connect up to five wifi-enabled devices with a cellular backhaul connection – a sort of 3G dongle on steroids.

Telecoms.com has been playing with one of the Novatel devices for a couple of weeks and is impressed by the concept. It’s more user friendly than a dongle because, with  no software to install, everything is accessed via a web interface. But the main benefit is that you can move the unit to an optimum coverage position — by the window, say — and leave your laptop or other wifi-capable devices on the desk or a more comfortable location. With a couple of hours battery life, it’s also got potential as an emergency hotspot, when you need to get a handful of users online.

Small businesses may understand the advantages of being able to set up a micro network on the fly, but explaining the concept to consumers is a different story altogether. Even Vodafone doesn’t seem to have a coherent pitch, with a spokesman saying that it is being marketed as a way to bring wireless connectivity to devices that might not otherwise have it, such as cameras, media players and gaming consoles. But as one analyst noted, the question here is why you would want to bring mobility to such devices? Gaming consoles would likely be better of connecting to the internet via a fixed line, where bandwidth and latency are not so much of an issue, while cameras and media players would need an interface to be able to use the connectivity and would likely struggle to stream any sort of media reliably.

Vodafone will initially make the MiFi 2352 device available in Germany, Romania and Spain, with no details on pricing or other markets available as yet.

Commenting on the announcement by Vodafone, Michael Kovacocy, European telecoms analyst and sector strategist at Daiwa Securities, said that the device represented a serious part of the convergence puzzle but the operator would likely be faced with difficulties in the economics of distribution as well as the marketing of the device. However, Kovacocy suggested that as a technological development, the mobile broadband hotspot could pave the way for the appearance of an ‘intelligent router’ in the home, perhaps combining it with a femtocell. Such a device could have both fixed line and mobile broadband connectivity, sending heavy duty apps over the fixed broadband connection and lighter touch apps over the mobile network, for example.

Earlier this month, 3 UK, announced its own plans to bring a similar mobile hotspot device to the country later this month. 3’s Mobile wifi device, also known as ‘MiFi’, is not the same MiFi unit that is manufactured by Novatel Wireless, but is instead a branded Huawei E5830 wireless modem that does a very similar job.

From September 18, 3 Mobile Wifi will be available from 3 on two plans: Broadband 5GB  is a one month rolling contract which includes 5GB of data for £15 a month, with an outlay of £69.99 for the device; and a Ready to Go option which prices the device at £99.99 and includes 3GB worth of data which can be used over a three month period, afterwards topped up on a prepay basis.

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.

Orange serves up access to Wikipedia

Mobile operator Orange has struck a deal with dispute resolution tool and fact finding site Wikipedia in a bid to boost mobile data traffic.

France Telecom’s wireless outfit said it will provide customers in France, the UK, Spain and Poland with access to co-branded content from the Wikimedia Foundation, which runs Wikipedia.

The deal will see the creation of specific Wikipedia channels on the Orange mobile web portals, as well as widgets which enable customers to access Wikipedia content directly from their Orange homepage.

Wikipedia is something of a traffic magnet. According to comScore Media Metrix, Wikipedia and the other projects operated by the Wikimedia Foundation receive more than 300 million unique visitors per month, making it the fourth most popular web property worldwide.

In other news, the mobile operator’s UK unit has introduced what it calls the “smallest, lightest and cheapest touch screen mobile available in the UK”. The Vegas is pitched at the mass market, priced at £48.50 on prepay and is available in black or pink.

Voda, Telefonica to share networks

The rumours were true. Vodafone, the world’s biggest operator by revenues, and pan-European carrier Telefonica, owner of the O2 brand, are sharing network infrastructure across Europe.

On Monday, the two carriers announced network sharing contracts across Germany, Spain, Ireland and the UK with detailed discussions ongoing in the Czech Republic.

The programme is expected to deliver significant business improvements, including cost savings amounting to hundreds of millions of euros for both companies over the next ten years, through a reduction of operating costs, and the ability to jointly build out new sites.

Both operators will continue to manage their traffic independently, but customers in the affected markets are expected to benefit from improvements in coverage, especially for mobile broadband.

In Germany, the companies are to share existing 2G and 3G sites, with shared masts also used for microwave backhaul; in Ireland the companies will share all network sites and jointly conduct new build outs; in Spain both companies will extend an existing site share agreement from 2007, which includes the shared usage of power, cabinets and mast; and in the UK both companies will focus on joint build of new sites and the consolidation of existing 2G and 3G sites.

When rumours of the network sharing deal first began circulating earlier this month, Informa Telecoms & Media analyst Paul Lambert noted that a deal between Voda and O2 would collapse the number of networks in the UK from five to three.

“This represents a major shift that’s taking effect in the industry, not least because it shows just how far operators have come over the last five years in what they consider to be their core business. No longer are they focused on operating networks, they are mainly focused on providing services,” Lambert said.

But, beyond the UK, this deal is significant because of the signal it gives to operators and, importantly, regulators worldwide: network sharing is the future. The UK government is understood to support the move by operators to share networks, which sends a powerful signal to other governments: let your operators share networks because it will improve network coverage and will likely lower the cost of services to end users. Indeed, the UK government’s recent Digital Britain initiative outlines aggressive broadband network coverage goals.

“Regulators will surely take note of what’s happening in the UK, and elsewhere in Europe such Sweden, and realise that to improve network coverage getting operators to share network is the way forward,” Lambert said.