The Samsung Galaxy Nexus smartphone is the first to run on Android 4.0

Telefónica’s UK operation O2 has told Telecoms.com that it is not fulfilling orders for the Samsung Galaxy Nexus smartphone until Google and Samsung have fixed a bug that sees the phone spontaneously lose audio, affecting voice calls and audio alerts. The Galaxy Nexus is the first commercially available handset to sport version 4.0 of the Android smartphone OS, which Google has dubbed Ice Cream Sandwich.

An O2 spokesman told Telecoms.com on Monday that: “There is currently an issue with the phone’s volume that Samsung and Google are fixing. We’re currently holding back on sending new Nexus’ until this issue has been resolved. Hopefully this should be in the next few days.”

The problem came to light towards the end of last week, with both Samsung and Google releasing statements that acknowledged the problem, and claiming that a software update would fix it. Samsung’s UK operation posted the following tweet: “Regarding the Galaxy Nexus, we are aware of the volume issue and have developed a fix. We will update devices as soon as possible.”

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Nokia's Lumia is too expensive at €420, according to Simon Lee-Smith

Nokia’s high end smartphones are “too expensive” according to the European general manager for devices at international carrier Telefónica. Simon Lee-Smith told Telecoms.com that Nokia’s premium devices are “not yet at the right price point,” adding: “If Nokia wants to sell in volume, they need to bring out devices which are cost-competitive.”

Lee-Smith said Nokia was “beginning to listen” to its carrier customers and that he expected the Finnish vendor to deliver devices in the new year that are “more commercially effective”. He said the problem related to products that have been available for some time, such as the N8 and N9, as well as the recently announced Lumia800, Nokia’s new flagship WP7-based smartphone.

At Nokia World last month Nokia CEO Stephen Elop said that the Lumia 800 would retail for €420, pre-tax and pre-subsidy.

The vendor also used Nokia World to unveil a rejuvenated emerging market proposition based around feature phones heavy on functionality but low on price. “I hope they’re successful with that,” Lee-Smith said. “They need to be able to subsidise their high end smartphones, because they’re too expensive.”

Device vendors generally have unrealistic expectations of what carriers and consumers will pay for smartphones, Lee-Smith said. “All device manufacturers seem to think that a €400-plus device is the norm. Well, it isn’t. Customers and operators won’t pay that cost for a device which doesn’t differentiate sufficiently.”

Simply improving the specifications of smartphones is not sufficient, he added, saying that operators in general, and Telefónica in particular, won’t pay premiums simply because vendors are delivering phones with bigger screens or higher resolution cameras. “Let’s not let the technology and cost curve ahead of the demand curve,” he said.

The Spanish incumbent has created four new organisation units

Spanish incumbent and global carrier Telefónica has restructured itself into four new divisions as part of what the firm called “sweeping changes” designed to “reinfoce the operator’s status as a global player and leader in the digital environment”.

Most interesting is the creation of a digital services unit that consolidates the various forays the firm has recently been making into areas such as e-health, cloud and M2M. The restructure also brings the Spanish operation, which has suffered along with the domestic economy, into a wider operating organisation.

Previously the Spanish operation was a standalone unit, with the O2 properties in the UK, Ireland, Germany, Slovakia and the Czech Republic acquired by the parent company in 2006, grouped together as Telefónica Europe.

Under the new regime, Telefónica’s operating companies will be grouped into two units; Europe and Latin America. Figures from Informa Telecoms & Media’s World Cellular Investors for Q211 put the total operator subscriptions for properties where Telefónica holds a stake at 220 million in the Americas and 111.3 million in Europe. The firm also has minority stakes in several African operations, China Unicom, Telecom Italia and Portucal’s TMN.

The European unit will be headed by José María Álvarez-Pallete, previously head of the Latin American unit. He will be succeeded in Latin America by Santiago Fernández Valbuena, the firm’s general manager of strategy, finance and corporate development.

A Global Resources unit has also been created, with a view to wringing further economies of scale from Telefónica’s footprint, under the leadership of Guillermo Ansaldo, previously head of Telefónica Spain.

But it is the creation of Telefónica Digital that is the most interesting element of the restructure. Headed by Matthew Key, hitherto the head of the O2 properties, the new unit will focus on developing the firm’s plays in video and entertainment, advertising, e-health, financial services, cloud and M2M. Key’s unit, which will be headquartered in London, with satellite offices throughout the firm’s footprint, will have 2,500 staff working to support the European and Latin American businesses with products and services where the firm has “the potential to operate directly in over the top businesses”.

Dario Talmesio, principal analyst at Informa, said the creation of Telefónica Digital was a sound move, but would depend on the firm’s ability to execute. “Much will depend on how it will work with legacy business and to what extent it is able to cascade innovation into the core business,” he said.

He also warned that the carrier would not have an easy time going up against established OTT players. “Failing that, the risk is that all its eggs will be put in one basket. If Telefónica wants to play at pure OTT, it should remember that it is in the same playing field as the internet giants—and it’s a tough business,” he said.

“Although the decision is a good one, Telefónica needs to keep its core business in mind while implementing internet-style business models.”

O2 will launch LTE in Germany on 1 July 2011, though initially only via DSL replacement routers in rural areas

Telefónica Germany has announced plans to launch LTE services on July 1, 2011. However the launch will be limited to DSL replacement routers capped at speeds of 7.2Mbps.

Two services are being launched, both branded ‘O2 LTE für Zuhause’, one aimed at home users, with a 10GB per month cap, and the other aimed at business users, with a 12GB per month cap. After the download cap has been reached, speeds will be throttled at UMTS 384Kbps for the remainder of the month. Both will cost €29.90 per month for six months and after that €39.90 per month, with a minimum 24-month contract.

The LTE router itself will cost €49.90 and there’s a €49.90 connection free. The router models available will be either a Huawei B390 or the Fritz!Box 6840 LTE.

O2 said the service will initially be availabel in several rural areas with others to be added in mid-July.

“With ‘O2 LTE für Zuhause’ rural areas will finally have fast internet access as well,“ René Schuster, CEO of Telefónica Germany said in a statement. “Video streaming, fast downloads and online computer games are no longer an issue in rural areas.”

Operating on 800MHz, which the company obtained via Germany’s “digital dividend” auction last year, the service is aimed at reaching white spots in rural areas that otherwise would not be able to receive broadband of any kind.

Spectrum in the 800MHz band attracted some of the highest bids at auction, not least because of its suitability for LTE deployments. 800MHz spectrum was granted to O2, T-Mobile and Vodafone last year on condition that it first be used to service rural areas that are under-served by fixed broadband.

The operator initially announced its intention to launch in July at CeBIT in March, where it said it would be using Nokia Siemens Networks for the infrastructure.

The launch will be the second for LTE in Germany, following on from that of Vodafone, which launched a service, supported by dongles, on December 1, 2010.

The fourth annual LTE North America Conference takes place in Texas, US, November 8-9

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WAC CEO Peters Suh says mobile applications is not a zero-sum game

When 24 of the telecoms world’s biggest players announced the formation of the Wholesale Applications Community (WAC) at the Mobile World Congress in February 2010, it’s fair to say the pundits’ response was overwhelmingly sceptical. The community’s stated vision of an open mobile development platform that would allow the creation of cross-device/OS/carrier applications was roundly dismissed as wishful thinking at best, cynical at worst.

Google VP of Engineering, Andy Rubin’s widely-quoted response that the write once, run anywhere dream was unlikely ever to be realised was deemed an apt summary of the folly of the venture. The inference was that if carriers were looking to loosen Google and Apple’s hold on the application market, they were wasting their time.

A year later, WAC has launched commercially and has a membership tally of 68, including AT&T, China Mobile, Verizon, Telefonica, Telenor and Orange. The sceptics are still there in numbers, but WAC CEO Peters Suh says he’s  pleased with progress, pointing to what he believes is the group’s critical mass, particularly in the operator department. “Over 27 mobile operators are members of WAC – essentially, the number one and two players in each market across the world is a member,” he says.

“And we’ve had good, broad support from the manufacturers,” he adds, pointing to Ericsson, Huawei, LG and Samsung, among others. ZTE was one of the first out of the blocks, with its WAC-enabled F952 smartphone, announced at this year’s MWC. WAC-enabled carrier-branded app stores based on white label solutions from Ericsson, Huawei and IBM are up and running, with Suh pointing to Telenor Serbia, Telefonica’s ‘Frigo’ apps community and Filipino carrier Smart Communications as the early adopters of the service.

But did the mobile applications world really need another player? Suh says WAC was never about whether or not there was room for more players, but rather about whether or not there was room for more choice. And as far as WAC is concerned, the answer was self-evident. “Obviously Apple and Google have had tremendous success and have done quite a bit to advance the industry, and we applaud them for that,” he says. “From a consumer and developer point of view, however, we believe WAC is about providing choice. And better reach and independence for developers.”

WAC essentially operates in the dual role of clearinghouse for developers and centralised apps pool for carriers. The apps are local, web-based, largely W3C widgets around which the community has built standards, definitions, structures and formats. The WAC 2.0 standard was released in February this year, and includes support for HTML5. WAC 3.0, which is due in September this year, will have what could well be the money shot in the whole deal:  developer access to operator network APIs. Suh believes that this last element, “opens up enormous possibilities for developers.”

Suh says that carriers offering developer access to network APIs constitutes a move into smart pipe thinking. “Once you have developers working off that back-end, it becomes less and less about simply carrying traffic and more about the intelligence of accessing data that is unique to operators,” he says. Giving the developer community access to that data “in a controlled manner” makes for what Suh calls “a very interesting paradigm.” It’s a gilt-edged opportunity for operators to inject something into the applications party that only they can bring.

“Operators have all invested billions, not only into the physical network, but into the entire infrastructure that’s behind it. If you provide that information through an API, through a common set, that presents a staggering opportunity,” says Suh, “not only for developers but also from the point of view of innovative applications and services for customers.” And, presumably, carriers in search of a differentiator.

Responding to criticism that all of this is just another spoke in the fragmentation wheel – after all, even the omnipresent Android leaves developers steering a course through a broad range of devices and their individual foibles – Suh claims the opposite is actually the case. “For us, technically, a lot of what we’re about is trying to reduce fragmentation as much as possible,” he says. Pointing to the myriad standards and choices for device operating systems, Suh says “Our view is that you’re not going to really differentiate in a significant way on the device runtime, so let’s make it more common, let’s make those API calls more consistent across the board, regardless of manufacturer or operating system. And let’s make the developer environment friendlier.”

Is that a write once, run everywhere scenario? “That would be a fantastic end-state, but we know there’s still work to do on that front from an industry perspective – WAC’s perspective is how do we make that goal easier for developers to accomplish.” WAC’s web-based aspects certainly allow developers to sidestep the need to write native apps for specific devices, although the presence of a standard API for native device functionality is in the mix. With AT&T CEO Randall Stephenson stating earlier this year that almost half the telco’s customers accessed the same content on three or more devices, it’s easy to see why HTML5 shows so much promise to an initiative like WAC, especially when you take on board resources like presence information or the capacity to build apps that work offline.

Suh says that the combination of API specs, web standards and potential customer reach of over three billion is a powerful mix, not least when you consider that the device manufacturers are also at the WAC party. The real tipping point could be when WAC-enabled devices go mainstream; it’s unlikely that developers will eschew the opportunity to play in a market of such magnitude, where web-based applications can mix with native ones in a revenue-sharing environment that allows developers and operators to negotiate their own terms. “WAC’s model gives operators who are otherwise competing with each other the flexibility to do deals with individual developers,” says Suh. “Carriers can negotiate with developers to achieve better placement, positioning, exclusivity…They can negotiate this separately.”

WAC’s common platform vision might put everyone on a level playing field in terms of developer access, but Suh says there’s no similar requirement when it comes to revenue models. “The most common revenue-sharing arrangement we’re seeing is 70/30,” he says, “we haven’t specified a business model as far as specific revenue share is concerned; members have all sorts of sensitivity points in that regard, whether it’s regulatory or market driven.” Models cover a broad spectrum of free, paid and shared, with operators in a position to negotiate exclusivity with developers as part of an overall strategy to differentiate within the limits of a popular OS.

As Suh points out, it’s an interesting development in an industry once defined by its walled garden approach to everything. “There’s this notion out there that this is a zero-sum game and that’s not really our view,” he says. “As long as WAC provides better options and choices, it’s better for everyone.”

Suh says that WAC lacks a vested interest in any one OS, platform or operator, putting it in a unique position to create a broader, more interoperable development ecosystem in which no one platform dominates. If that sounds like a move into standards territory, Suh says that’s only half the story; while standards obviously form part of the landscape, the vision is a lot broader than that. “We want to open things up so that it’s standard across the industry, but we also want this to be operational – that’s what makes WAC different from standards body groups,” says Suh.

Another criticism levelled at WAC has been that this is just another late-to-the-party attempt by carriers to muscle in on a market they did little to create or innovate on. Suh disagrees, saying that carriers have tried “for at least ten years to provide applications within a mobile framework.” He adds that delays caused by issues around devices, software services and topography and different commercial models have all contributed to a less than speedy emergence out of the blocks. “Could they have been faster? Probably,” says Suh.

“One of the things that has been a catalyst for the industry overall in the past few years is the belief in the enormous potential for smartphones and for the applications that run on them – operators are trying to address that.” One of the WAC initiatives likely to open up the opportunities in this space is in-app billing and authentication, which Suh says will debut in the WAC 3.0 spec, due in September this year. Yes, Apple has been offering the service since 2009, RIM has it and Google launched it for its Android Marketplace in March this year (having promised it for more than a year), but Suh points to its impending arrival in WAC’s specifications as part of an overall strategy of building credibility by hitting milestones.

Cynicism aside, carriers responding to developments outside their control inside a year could be interpreted as blistering pace in some quarters. With suggestions that developers are hitting a spot of Android fatigue, maybe its time to begin looking at the carriers and the WAC in a hare-vs-tortoise sense.

Movistar customers across Brazil, Argentina, Colombia, Chile, Ecuador, El Salvador, Guatemala, Mexico, Nicaragua, Panama, Peru, Uruguay and Venezuela can now access their social networks, including the likes of Facebook and Twitter, via the mobile portal known as Xumii Social Stream.

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Eduardo Mendez Polo, global services and cloud computing manager at Telefónica

Ahead of the Telecom Cloud Services Summit in Berlin in early May, telecoms.com caught up with Eduardo Mendez Polo, global services and cloud computing manager at Spanish carrier Telefónica, to talk about cloud as a technology and a business.

‘Cloud’ means many things to many people. What is your definition?

There are too many definitions of what “The Cloud” is and I do not want to add a new one that. My preference here is to change the perspective – ‘cloud’ only has a meaning for the final customer. So it is not “The Cloud”, it is now “My Cloud”. It is not a technology matter, it is the benefit my business gets from it.

Where do you believe the greatest opportunities are in terms of cloud technology adoption?

In the short term: cost and time-to-market significant reductions. In the long term, enhancements of service management through automation and standardisation.

Are you aware of any challenges to the adoption or deployment of cloud services?

Yes, every cloud customer must select carefully between the options to choose the one that meets all his/her requirements. But there is too much debate about this point, which does not add any additional issues than those we had to deal with for regular hosting offerings.

Should cloud primarily be used to optimise in house processes – such as optimising your data centres? Or are its main benefits those that can be passed on to customers – service delivery?

In the short term there are important internal benefits that deliver service management optimisation. Although final customers may benefit from the cost reduction through price, the main benefit will come once the customer-provider as a pair find the best approach to manage and govern the service.

Which key markets do you see cloud as a good fit for? Is it restricted to vertical markets?

Most predictions and trends show that (Infrastructure as a Service) IaaS is the key business offering in the next few years. IaaS, by nature, is wide market offering. Specialist catering to vertical markets is coming mainly through SaaS. But in my opinion, the long term will show a significant increase is SaaS specialisation, as the small office/home office market loses its fears about the cloud.

How important are partnerships in the cloud space? Are enablers needed to make a successful move into the area?

Partnerships must take a key role in cloud adoption. In my opinion the integrator role is key to adapt to a cloud environment, so they can help the final customer get the most benefit.

With regards to technology – is cloud a mature model?

Pure technology has a high maturity level. Tools still need to “arrive to a safe harbour”, as standardisation is still an open issue. Processes will be the final aspect as organisations will need to fix them. ITIL and ISO 20.000 will evolve to include specific cloud use cases.

With regards to business model – how does cloud change the game?

For hosting providers, it means greater competition as new players are entering the market. For telecoms providers it opens an opportunity to provide additional value to business customers.

Which companies do you see as pioneers in cloud adoption?

Two cases: Dreamworks (as a showcase of effectively offshoring computing loads to an external provider) and pharmaceutical firm Lilly (as a case of how a corporate efficiency strategy is met in the IT world).

Eduardo Mendez is speaking on telecom cloud provider differentiation – from product to service, on day one of the event.

Mexico's MVS Communcaciones wants to rollout LTE in the country

In a telecoms market not noted for competition, Mexico’s MVS Communicaciones’ announcement of plans to invest $1bn in an LTE network as part of a consortium that includes Clearwire and Intel should, in theory, shake things up. The consortium would sell access to its network to a variety of local players, including its rivals, opening up a market that has been dominated by billionaire Carlos Slim’s America Movil.

But, according to Informa analyst Daniele Tricarico, things are unlikely to be that simple. While MVS’s proposals await approval from Mexico’s Finance Ministry and regulator Cofetel, rival telcos are demanding that the carrier be forced to sell off its spectrum holdings in the 2.5GHz band – on the grounds that it isn’t using them. According to Tricarico, MVS has already seen more than 10 per cent of its licences expire, with the remainder set to be gone by 2018 if it doesn’t move on them.

With MVS chief Joaquin Vargas arguing that the under-utilisation is caused by the government’s seeming inability to reach any decisions on its proposals, Tricarico says the situation is fraught with tension. Spectrum in the 2.5GHz band was originally designated for use in pay-TV services; MVS’s proposed use of the spectrum to provide WiMAX services requires regulatory approval – a state of affairs that will still apply now that the carrier has said it’s interested in LTE.

“It’s a complicated situation, a very Latin American situation,” says Tricarico. “America Movil has more than 70 per cent market share. Everyone knows they’re very well connected to both the government and regulator, they have massive influence in the country.” Under the circumstances, its difficult to escape MVS’s inference that there’s more to the delay than initially meets the eye. Tricarico points to recent controversy over interconnection fees as a case in point for a market in dire need of competition: “America Movil in particular and sometimes Telefónica are so dominant that they’re able to retain control over the market,” he says.

With Movil charging what are often described as the world’s highest interconnect fees, rivals have regularly complained that this allows the telco to retain a strangehold on the market, with customers unwilling to move to operators with fewer subscribers. Its a dominant position that even the government of Mexico has struggled to break: the company was recently fined $1bn by the country’s competition watchdog in a case that took four years. The operator has said it will appeal.

Regarding Mexico’s LTE future, Tricarico says it can only be hoped that the country avoids the unbalanced outcome of its 3G rollouts; spectrum constraints saw AM’s rivals struggling to get into the 3G game even as the government invited foreign players such as Deutsche Telkom and China Mobile to bid in an effort to increase competition. They declined, citing high interconnect fees and a lack of clarity on shared infrastructure. “They’re talking about LTE, but they’ve only recently auctioned 3G spectrum,” says Tricarico of Mexico, pointing out that, until recently, even Telefonica was unable to offer that service outside of restricted urban areas. “Even before LTE, the 3G market was very unbalanced, again in favour of America Movil. In the ideal world, you wouldn’t want to replicate that situation with LTE.”

Tricarico says that, in the context of a tense local market, the presence of big American suppliers like Intel and Clearwire makes the MVS consortium an interesting proposal. “These US players are siding with a Mexican company and bringing different expertise to develop infrastructure,” he says. “It’s not clear at what stage they are in terms of planning this, if they’re just in talks or if there’s something more defined. But the real issue is that, without some evolution from the regulator, none of this is going to happen.”

With the jury out on the regulations and competition front, Tricarico says that about the only sure thing the industry can learn from the situation is that is that “Clearwire is definitely going for LTE, which we probably knew already. A lot is happening and in a sense it’s looking like everyone is taking sides against America Movil.”

Whatever way you slice it, it’s clear that Mexico’s on the LTE road but, as MVS’s Vargas said recently, “There is a lack of clear telecommunications policy in the country. The government will have to define if it wants competition or to collect more money.”

Telefónica may cut 20% of its domestic workforce

During its two day Investor Conference at the end of last week, Spanish carrier Telefónica hinted at workforce cuts in its domestic market, potentially affecting as much as 20 per cent of headcount in Spain, or some 6,000 employees.

The cuts, revealed by Guillermo Ansaldo, head of Telefónica’s Spanish business, would take place over three years, as part of a focus on higher productivity drives which may also include outsourcing of operations and mobile network sharing – such as the deal struck between O2 and Eircom in Ireland. Certain IT applications and real estate will also be sold off for gains in the region of €600m, Ansaldo said.

Telefónica will look to its Latin American operations for the bulk of future growth, with the domestic unit underperforming and Spain in the grip of economic downturn.

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