Huawei was denied an opportunity to bid for a US government contract

Chinese network vendor Huawei has been refused permission by the US government to bid for a contract to work on the nationwide emergency network. A government spokesperson said that permission was refused due to national security concerns. The firm as now asked the government to elaborate on its reasons.

US Commerce Department spokesman Kevin Griffis explained in an e-mail to news agency Bloomberg that Huawei would not be taking part in the program “due to U.S. Government national security concerns”, although he declined to elaborate on the nature of those concerns or how the decision was reached.

Huawei has repeatedly seen efforts to expand in the country run into opposition from US authorities, who have cited alleged links to China’s military, which Huawei has denied. The company employs 1,500 workers in the country and said that it had spent $6.1 billion last year on goods and services.

“Notwithstanding that it is an ill-founded, ungrounded determination, it could have a chilling effect on our greater U.S. business activities and accountability needs to be defined appropriately,” said William Plummer, a Washington-based spokesman for Huawei.

He added that the company wants to know the statutory authority and regulatory regime under which the latest decision was made.

15 US politicians have sent a letter to Obama urging him to approve merger

US President Barack Obama has received a letter from 15 US politicians calling for his administration to approve the merger between AT&T and T-Mobile.

The letter, put forward by member of congress Heath Shuler and 14 other Democrats, said that the proposed merger of AT&T and T-Mobile USA would help solve America’s job crisis by reducing unemployment, encouraging private investment and promoting new and innovative technologies that will drive job creation.

“AT&T has announced plans to repatriate 5,000 jobs that are currently being performed overseas.  In addition, a recent SITE study has shown that the merger will create somewhere between 55,000 and 96,000 new jobs to integrate the two networks and upgrade facilities,” the letter read.

It added that the merger will encourage new private investment to deploy wireless high speed internet access services to 97 per cent of the US population. Coverage of this magnitude will necessitate an additional $8bn investment from AT&T over and above its current industry leading capital investments, the politicians argued.

“Finally, the deployment of next generation, wireless broadband is the type of investment in new and innovative technology that will drive job creation for years to come,” the letter continued, adding: ”A recent study by Deloitte predicts that next generation wireless broadband buildout by the wireless industry will create 371,000 to 771,000 jobs and GDP growth between $73bn and $151bn by 2016.  AT&T’s proposed merger commitment to make available this new technology to 98 per cent of the nation’s population will be a key component of the industry buildout.”

However, Public Knowledge, a Washington-based public interest advocacy organisation, said that the deal would be bad for the US economy, consumers and technological innovation.

“We thought the issues of job creation and investment had long been settled.  It is perfectly clear that AT&T’s history has been to destroy jobs, not to create them.  The company has shed 10,000 jobs a year for the past ten years.  There is no reason to believe that the takeover of T-Mobile will do anything to change that dynamic,” said Gigi B. Sohn, president and co-founder of the organisation.

“To the contrary, T-Mobile has created jobs at the same time AT&T has cut them.  And by removing T-Mobile’s investment, the amount of money spent on improving the wireless networks will be less, not more.”

The Department of Justice argued that T-Mobile's independence is vital for competition in the US mobiel market

The US department of Justice has filed a civil antitrust lawsuit in a bid to block AT&T’s proposed $39bn acquisition of T-Mobile’s US operation, claiming that the deal would “substantially lessen competition” in the US wireless sector. If successful, said Deputy Attorney General James M. Cole, the move would result in higher prices and lower quality for consumers.

The deal was announced in March this year and would see second placed AT&T propelled past market leader Verizon to first place and a share of the US mobile market greater than 40 per cent. The latest figures from Informa’s WCIS Plus service show AT&T with 98.6 million customers and T-Mobile USA with 33.1 million. The combined total of 131.7 million far outstrips Verizon on 106 million customers.

Cole said that T-Mobile has until now served as a competitive force in the market and that if it were to be absorbed into AT&T, the absence of that force would be keenly felt. “Consumers across the country, including those in rural areas and those with lower incomes, benefit from competition among the nation’s wireless carriers, particularly the four remaining national carriers,” he said.

T-Mobile has racked up a number of market firsts in the US, including the first Blackberry email service, the first Android handset, a nationwide wifi hotpsot network and a number of innovative pricing bundles, the DoJ said, making its ongoing autonomy essential to the market. However, the fact that Deutsche Telekom has been known for some time to be looking to offload its US operation, suggests that those innovations may have proven unsustainable.

“Unless this merger is blocked,” said Sharis Pozen, who heads up the DoJ’s Antitrust Division, “competition and innovation will be reduced and consumers will suffer.”

Ovum chief analyst Jan Dawson, said: “At the very least, this will now create a massive uphill battle for AT&T in consummating its merger, and will create significant delays. At worst, it will prevent the merger from happening entirely, which will result in a massive breakup fee of several billion dollars and various other concessions on the part of AT&T. The uncertainty created in the meantime poses several very difficult decisions for AT&T, especially in terms of network investments. It will have to decide whether to press ahead with its own LTE rollout on the assumption that T-Mobile’s network assets and spectrum will eventually be part of it, or whether to pursue another strategy for rolling out 4G.”

All this is happening at precisely the time when AT&T needs to accelerate its 4G rollout to keep up with Verizon, Sprint and others who are much further ahead. One option AT&T should immediately pursue is a network-sharing arrangement with T-Mobile along the lines of similar deals we’ve seen in Europe and elsewhere. This would provide some of the same benefits without raising as many concerns on the part of the federal government, and would arguably have been a better strategy from the outset given the inherent risks involved in such a major acquisition, Dawson said.

After all, who would expect a telco to buy a firm that helps enterprises migrate apps securely to their competitors’ clouds, including Amazon Web Services and Microsoft Windows Azure?

Who’s the barbarian now?

Smug assertions about telcos’ inability to adapt to the Cloud Era don’t stand up against Verizon’s recent actions. They also challenge perceptions of who’s besieging whom.

Verizon’s $1.4 billion Terremark acquisition continues to be shaped as a cloud ‘diffusion’ line. CloudSwitch boosts positioning as a trusted cloud intermediary. Verizon’s deep cloud security skills – encompassing mobile devices – are another asset.

But Verizon isn’t alone in cloud smarts; Japan’s NTT Group is too. Through its stalking horse Dimension Data (acquired in 2010 for $3.2 billion) and a host of other acquisitions (including two in 2011) NTT is steadily building a diverse arsenal to help enterprises move to the cloud.

Not least, NTT will share the spoils. It also sells cloud expertise to other telcos like the Philippines’ PLDT, India’s BSNL and Hong Kong’s Hutchison Global Communications.

Another Golden Horde

Among the 90+ operators tracked in the Informa Telecom Cloud Monitor, most are simply offering commodity services, and going broke for scale.

But Verizon and NTT are among an elite advance guard. Telcos in heritage they may be, but they’re transforming to win. For both, that means taking actions that grow the entire market, even if so-called competitors may also profit. That’s a mature recognition that a multi-cloud world is emerging.

Will it have been worth it? The US is absolutely crucial to Spotify’s long-term plans. There’s no escaping from the fact that the amount of money artists receive per stream from music-streaming sites is incredibly low. This is a particular concern in the US, where labels generate much of their global revenue. But the only way Spotify can grow into a viable financial model, and move towards placating labels and rights-holders, is by amassing a huge number of users.  Music streaming will always be a low-margin, high-volume business, and the US helps Spotify towards achieving the latter. With one set of negotiations – no matter how protracted – the service now has access to a population the equivalent size of the EU.

The P Word

The US is a very different beast from Europe, of course, and, in a sense, Spotify’s success in Europe counts for little in its latest territory. Outside tech circles, the site has limited brand awareness. And in Europe no other music on-demand service, with the notable exception of Deezer in France, has built up an audience close to Spotify. In the US, Rhapsody and Napster have been plugging away at the paid-subscription game for years, while Mog and Rdio are other notable new entrants. And this is without even mentioning Pandora, which just announced its 100 millionth user and for many US consumers, along with iTunes, is digital music.

Yet no music on-demand service has broken through a million paying users yet. In fact, Informa estimates that there were only 2.5 million paying music subscribers in the US in 2010, including paying users of Pandora (customized radio) and eMusic (MP3 bundles), both very different offerings to Spotify. So despite the competition, there is a definite gap in the market for Spotify, and an opportunity for it to grow said market. If all it manages to do is poach a few users from its competitors, the launch must be deemed a failure.

When not to change a winning formula

It’s also worth remembering that, more so than in Europe, the US is a market where consumers are willing to pay to subscribe to content. A top-end triple-play package can easily cost US$150/month in the US, compared with under US$100 in Europe. 23 million users subscribe to Netflix, while over half of all users of Microsoft’s Xbox Live subscription service come from the US. And, to top it all, at US$10/month – the benchmark stand-alone cost for music streaming including mobile access in the US – Spotify is much cheaper than in Europe. That cost will drop even further if it is able to strike the kinds of subsidized deals in the US that it has with Telia in Sweden.

With this all being so, why have others not succeeded already with music subscriptions in the US, and what can Spotify do differently? In a sense, it must simply repeat the formula that has served it so well in Europe: A clean, intuitive user interface, deep links with properties like Facebook and Last.fm (a Pandora deal is not out of the question) and high penetration across mobile handsets and other devices.

Yet what will really determine whether Spotify will thrive or merely survive is the free element, which is currently available via invite only and is capped at 20 hours listening per month before dropping further. None of the music on-demand services in the US have a free element beyond limited trials. And Pandora’s rabid success is built on the back of most elements of the service being free. While none of this may appease (understandably) cautious label execs, the fact remains that Spotify would not have got one million plus paying subscribers in Europe without being able to introduce users via the free service. It may not get that many, even across the vast swathes of the US, if it is forced to cap its free offer too quickly.

The m-payments bandwagon is gathering pace

US carrier Verizon has become the latest telco to jump on the mobile payments bandwagon, announcing on Tuesday a partnership with mobile transaction firm Payfone to bring carrier billing to Verizon Wireless users.

The companies didn’t set a launch date but, when the service beomes available, it will allow Verizon customers to make online purchases from their smartphones, tablets and PCs using several payment methods, including charging purchases to their monthly bill or more traditional payment methods through financial institution partners like American Express.

“Our relationship with Payfone complements the part of the mobile payments equation we’re already working on with our Isis joint venture,” said Greg Haller, VP marketing, Verizon Wireless. “We approach the mobile payments arena from a customer’s perspective. As we move forward, the most important goals will be security, privacy and simplicity. Through our relationship with Payfone, we will be able to quickly offer value to our customers by offering them greater choice and a simple, safe and secure purchasing experience when shopping online from their smartphones, tablets and PCs.”

Last month Isis, the mobile payments joint-venture between AT&T, Verizon and T-Mobile in the US, scaled back initial plans to roll out its own mobile payment network in favour of an m-wallet-style offering after the telcos decided that setting up a separate payments network would be too difficult and time-consuming, leaving the carriers to go their own way, as Verizon has done this week.

Verizon

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The CEO's of AT&T and Deutsche Telekom have faced questions over the proposed merger of AT&T and T-Mobile USA

US lawmakers have given AT&T and T-Mobile executives a hard time at a competition hearing, as they debate whether to allow the $39bn merger of the two telcos to go ahead.

“I see absolutely no redeeming reason for this merger to go through,” Representative John Conyers Jr. of Michigan, the senior Democrat on the US House of Representatives Judiciary Committee said, according to a PC World report.

Conyers also said that he feared that the merger would result in job loses at both companies, and would also lead to higher prices for consumers.

Speaking to Randall Stephenson, chairman and CEO of AT&T, and Rene Obermann, CEO of Deutsche Telekom, T-Mobile’s parent company, Conyers said: “Normally, at antitrust hearings, we get the promises that there won’t be losses of jobs and they won’t raise the rates. The thing I like about these witnesses is, they don’t even promise that. I thank you for your evasiveness on this issue.”

In defence of AT&T, CEO Stephenson said that the merger would help with its spectrum crunch, and enable the company to roll out LTE services to feed the demand for high data from its customers.

Meanwhile, Obermann stated that the proposed merger was good for T-Mobile USA customers as the company did not have the spectrum needed to roll out LTE and therefore to compete.

Representative Bob Goodlatte, a Virginia Republican and subcommittee chairman, picked up on this and asked Obermann why he had told investors in January that T-Mobile had a superior 4G network with better spectrum resources than competitors.

“Is T-Mobile today a viable competitor in the U.S. market, or is it not?” Goodlatte said.

Obermann was forced to admit that T-Mobile did not in the long term have the spectrum and that it was therefore trying to compete via “aggressive marketing”, – which would explain its propensity for describing its HSPA+ network and supporting devices as 4G.

In related news Canadian authorities said they would be also investigating the proposed merger.

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

AT&T

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The future of T-Mobile USA had been the focus of high-stakes negotiations within DTAG ever since Philipp Humm was catapulted in to head up the struggling business unit. Whilst a merger was always seen as a likely potential outcome, it was a partnership between T-Mobile USA and LightSquared or fellow struggler Sprint Nextel that had always been deemed of greater probability. The hand that Rene Obermann and his executive team played yesterday in scooping $39 billion for the ailing business has arguably trumped all others and has to be seen as pulling the ace from the pack.

T-Mobile USA’s standing within the Deutsche Telekom business had veered dramatically in recent years from the star performer in its global portfolio to an isolated and increasingly problematic black sheep. The sale of the unit helps Deutsche Telekom to recoup the value sunk into the business, while retaining a strategic interest in the hugely important US market through its 8% equity holding in AT&T. The strong transatlantic ties that should now develop between AT&T and Deutsche Telekom will represent an interest counter-balance to the deepening partnership emerging between Vodafone and Verizon.

AT&T had paid a full price for its smaller rival, but the motivation for shelling out to that extent is pretty straightforward – it’s about stocking up on its supply of the basic raw materials that drive a successful operator business, namely spectrum, sites, stores and customer scale. The combined business will enjoy massive scale in all aspects and can rightly boast that the bringing together of the two very complementary businesses will create a world-leading mobile broadband network platform.

Much commentary has focused on the potential negative impact for consumers of the inevitable decline in competition in the mobile space, but the reality is that there’s going to be little change for consumers in the short-term. In fact, the deal’s going to have most value for the lawyers and bankers that stand to benefit from the year-long struggle for regulatory approval that lies ahead. The concentration of close to 75% of the wireless market into the hands of just two players, AT&T and Verizon, will inevitably draw fire from the US authorities, including the FCC and the Department of Justice. If and when the deal is finally approved it will likely not be without significant concessions being imposed upon AT&T by the industry watchdog, such as divesting spectrum holdings, divesting customers or granting access rights to tower sites to smaller players where excessive market concentration is identified.

European perspective
T-Mobile USA has always been a challenging business for Deutsche Telekom but, at the same time, one that has offered growth potential to offset a stagnating western European business. Without T-Mobile USA, Deutsche Telekom becomes a pure European play. Whereas the other three European giants, Vodafone, Orange and Telefonica, all have significant assets in other regions, Deutsche Telekom is firmly anchored in Europe. However, Deutsche Telekom’s central European subsidiaries in Croatia, Hungary and Slovakia – and its indirect stakes in Greece, Poland, Romania, Macedonia and Montenegro – still hold rich potential.

We believe that Deutsche Telekom will invest heavily in these businesses and markets rather than embark on another foray outside of Europe. Building next-generation fixed and mobile broadband networks requires significant investment and we would expect Deutsche Telekom to emerge as the dominant player in many of these countries. Substantial opportunities in wholesale and enterprise market opportunities exist for those players who can offer extensive, high-capacity broadband coverage but only the leading operators will be able to commit to such investments.

Certain software and hardware products used with medical devices as low-risk

The US Food and Drug Administration has issued a final rule that reclassifies certain software and hardware products used with medical devices as Class I or low-risk products. Until now, these devices were considered to be either Class III (high-risk) devices requiring pre-market approval or accessories to an existing medical device.

The low-risk classification means these products will be exempt from pre-market review, but will still be subject to quality standards. The reclassification will come into effect on 18 April.

Known as Medical Device Data Systems or MDDS, these products are off-the-shelf or custom hardware or software that can be used alone or in combination with other devices. MDDS are used for displaying unaltered medical device data or transferring, storing or converting medical device data for future use, in accordance with a pre-set specification.

Examples include devices collecting and storing data from a glucose meter for future use and devices that transfer lab results to be displayed at a nursing station for future use.

The FDA had earlier indicated plans for lowering the risk classification of these products as an MDDS by itself does not provide any diagnostic or clinical decision making functions. In its final rule, the agency clarifies that an MDDS is not intended to be used in connection with active patient monitoring.

The downscaling of the classification level, the FDA says, is a common sense regulatory approach that provides clarity and predictability for manufacturers of these data systems.

Originally published on Clinica.co.uk

Sanjiv Ahuja, CEO of forthcoming US wholesale carrier Lightsquared

Sanjiv Ahuja, the chief of forthcoming US wholesale carrier Lightsquared, has sent a letter to the country’s communications authority addressing concerns that the LTE and satellite-based network may interfere with GPS services. Ahuja is seeking to assure the FCC that “there will be no interference,” in order to keep its rollout plans on track.

Lightsquared is currently running trials in Baltimore, Denver, Las Vegas and Phoenix and plans to launch in the third quarter.

Industry bodies, including the National Telecommunications and Information Administration and the Department of Defense, Transportation and Homeland Security, had raised concerns that a modification of Lightsquared’s licence to allow for terrestrial as well as satellite offerings will cause interference with existing services.

“Grant of this application is an essential building block for our network and requires quick, favorable action so that we may continue to roll out our network and meet the rigorous construction timetable that the Commission has made a condition of our authorization,” said Ahuja. “The record in this proceeding, however, includes concerns from the GPS industry about possible overload of GPS devices by LightSquared base stations. Nothing in the integrated service application changes the operating characteristics of LightSquared’s network or its intended use… Like other network operators, LightSquared itself must be able to bring devices onto its network that incorporate GPS technology, so it has a strong incentive to resolve this issue,” Ahuja wrote.