...Or don't. It's been the kind of week, after all, where the crazy old people of social legend who keep their life savings stuffed into their mattresses suddenly don't look so crazy any more. In fact, the Informer's dear old Granny - whose funds were up until yesterday invested almost exclusively in insurance firm AIG - was told by her financial adviser to take the money out and keep it. The poor man couldn't think of anywhere to recommend that she might make a new investment.

September 19, 2008

11 Min Read
Take it to the bank...

By The Informer

…Or don’t. It’s been the kind of week, after all, where the crazy old people of social legend who keep their life savings stuffed into their mattresses suddenly don’t look so crazy any more. In fact, the Informer’s dear old Granny – whose funds were up until yesterday invested almost exclusively in insurance firm AIG – was told by her financial adviser to take the money out and keep it. The poor man couldn’t think of anywhere to recommend that she might make a new investment.

The Informer’s going to pay a visit to Granny at AutumnDaze retirement home this weekend, dressed in his sharpest suit and with a PowerPoint business plan presentation installed on his laptop. Because the Informer has an idea. He may well give the presentation to everyone in the sitting room, since they all seem to think he’s their son, anyway. It will be like a friendly, absent-minded Dragon’s Den that smells of mints and mothballs.

The Informer’s idea came to him on Wednesday as he sat at a roundtable hosted by ad-funded, UK youth MVNO Blyk. (Youth is defined as 16 – 24 years old in most developed markets apart from Italy, where you can be a youth all the way up to 30.) The firm announced 200,000 ‘members’ this week (they’re not called customers, users, subscribers or tricks, because it’s exclusive, innit) which is some way ahead of the uptake curve. The firm’s just shy of a year old and it was gunning for 100,000 in the first 12 months.

You can manipulate expectations to create the impression of strong performance, of course; a couple of hundred thousand users doesn’t sound like much in telecoms terms. But Blyk doesn’t see itself primarily as an operator. It’s a ‘Youth Media’ and, when benchmarked against others in this category – lads’ mags, etc – the firm insists that the numbers are strong.

They’ve got some interesting stats on the go, too. The average response rate to Blyk-delivered adverts is 25 per cent, which is sky-high, even accounting for the novelty of the medium. The advertiser’s cost per response is £0.05 and the firm is claiming 60 per cent repeat business from its advertisers.

Six out of ten members have joined Blyk on recommendation and 98 per cent of all customer care is self managed. The MVNO’s enterprising end users have established forums – by themselves – which answer the overwhelming majority of their own queries.

There was some bad news for other mobile players. According to Blyk, the young people of its acquaintance are largely uninterested in mobile content, which is the subject of the majority of mobile advertising efforts today. And UK CEO Shaun Gregory told an amusing story about trying to spend a £25,000 advertising budget with an unnamed but large UK operator. He said he had 27 touch-points at this operator before eventually getting through to someone who was able to talk to him about his spend. And he was given two agency recommendations for creative work and told to call back. That’s just an anecdote, of course, and the Informer cannot attest to its veracity. (Nor does he have any reason to believe it false.)

Anyway, back to the Informer’s idea. It turns out that a good portion of the 1,000 campaigns that Blyk’s run in its first year are focused more on trend spotting and analysis than on actually trying to stimulate sales. Blyk is proving a useful tool for finding out what it is that kids like. A high portion of responses are qualitative as well, the firm said. For some of these campaigns the number of members targeted can be as small as 18. And recommendation is the most effective means of generating interest and sales.

So, what we need to really make this kind of thing work is a dynamic database of individual youths that takes all of the information currently available and factors in real-time popularity. We’ll need a bunch of people monitoring social network sites to see how friend numbers fluctuate and to note how relationships are being impacted by behaviour. We’ll need to outsource live updates to playground monitors and dinner ladies in schools, and bar staff in pubs – the network’s in place, we just need to activate it.

Eventually we’ll have a popularity index for the segment that will enable us to target only the most influential youths at any given moment. The captain of the sports team gets dumped on his backside by the maths genius? His worth goes down, don’t target him. The lonely kid with the specs turns out to be responsible for all that top notch graffiti on the railway bridge? Quick, quick, target him, his influence is rocketing. It’s a brilliant idea, even if the Informer does say so himself. And you wouldn’t bet against it happening. You could even “incentivise” kids to provide real time updates themselves. And it’s copyright me, so don’t think about nicking it.

“So, Granny, what we’re talking about is a dynamic youth status database. We can mobilise the workforce at a moment’s notice and our burn rate should be entirely manageable. We’re forecasting ROI within 18 months and we’ll be looking to exit through acquisition inside two years. You get a seat on the board. With a cushion. It’s what we in the business call a win-win, Granny. Surely you see there’s significant upside? Granny? Granny? Oh, she’s fallen asleep again.”

It’s a better idea than investing in Nortel, anyhow. The Canadian firm told investors this week that it is “experiencing significant pressure”, tempering analyst forecasts of four per cent revenue growth with a reality checking two to four per cent decline. The firm is investigating “further restructuring and other cost reduction initiatives,” it said, before promptly announcing the planned disposal of its Metro Ethernet Networks business.

This is a flagship unit at Nortel and the timing of the announcements made them appear for all the world like cause and effect. Not so, said Nomura analysts, arguing instead that the sub-scale unit is worth more from a sale than it is to keep running. So not only is Nortel having a bad time financially, its message management needs a kick up the backside as well.

While we’re on troubled vendors, the hackles were up this week among Alcatel Lucent employees, many of whom launched a (probably futile) bid to persuade departing CEO and chairman – Pat Russo and Serge Tchuruk – to forego substantial severance packages. Russo is pocketing $9.4m in ‘thanks for nothing’ money. The Informer would like to make public his availability for the kind of job where you can get paid nearly $10m for presiding over massive losses. What a dream.

It’s all smiles at Nokia, though, which was lauded by environmental charity Greenpeace this week as the world’s greenest electronics vendor. It had been toppled from the top spot by Sony and its handset JV Sony Ericsson in last year’s ranking but, with improved product take-back and recycling practices, the Finn re-took the lead, with a score of seven points out of ten. Reflecting the current handset market share table, Samsung was in second place with 5.9, while erstwhile leaders Sony Ericsson and Sony took fourth and fifth respectively.

Motorola got a special mention for its tireless recycling of the RAZR form factor.*

The GSMA announced a green initiative of its own this week. The Green Power for Mobile programme is aimed at increasing the use of the cellular industry’s renewable energy sources. The target is to have 118,000 new and existing off-grid base stations in developing countries powered by renewable energy by 2012. This, said the GSMA, could cut annual carbon emissions by up to 6.3 million tonnes.

The organisation reckons that, today, only around 1,500 base stations around the world are powered by renewable energy sources, with ambitions in this area hampered by commercial (un)availability and viability issues and a plain, old fashioned lack of know-how.

When it’s not beavering away on matters environmental, the GSMA’s favourite pastime is battling with EU Communications Commissioner Viviane Reding over retail and wholesale pricing regulation. Well, some of it’s European members have taken the initiative; Deutsche Telekom, Orange, Telecom Italia, Telefonica and Vodafone have unveiled research from Frontier Economics to prove their collective point that enforced termination rate cuts are a Bad Thing.

The thrust of the findings appears to be a veiled threat, and it’s one that has been issued before. If the EU forces down termination rates, operators will be unable to cover their costs. So they will raise their charges in other areas, clawing back lost revenues from the hapless consumer.

Meanwhile, operators in Asia Pacific are being applauded by analysts for introducing capped roaming charges without ‘persuasion’ from regulatory musclemen. Singaporean player M1 has launched a new data roaming plan that caps usage costs at less than US$19 per day for consumption of 5MB or more. Below that level of consumption users pay $0.036 per 10KB. The deal is only good for users roaming on the Celcom Malaysia and SmarTone-Vodafone Hong Kong networks and only lasts until December, though.

Further west, Vodafone is expanding its presence in the Middle Eastern state of Qatar, where this week it won a fixed line licence to sit alongside the cellular one it claimed earlier this year. The UK-headquartered carrier expects to launch both services in 2009. Incumbent carrier Q-Tel has never faced competition on its home turf, so there may be a real opportunity for Vodafone to sheik things up!

The current financial crisis probably isn’t biting too hard in Qatar and – if Sprint Nextel CEO Dan Hesse is to be believed – it’s not making itself evident in the US carrier’s consumer business either. The firm has spent the last few months clinging onto existing customers rather than focusing on bagging new ones but Hesse said this week in a webcast that the operator is ready to open its doors once again.

He also said that he expects the Clearwire deal to close by the end of this year. Earlier this week the Informer spoke to Barry West, who will become president of the new Clearwire, is Sprint Nextel’s former CTO and currently heads up the Xohm mobile WiMAX unit that – he promised – is still on target to launch commercially this month.

West reckons the macro-economic situation at the moment is working in favour of the new players looking to take mobile WiMAX to market in the near future, thereby stealing a march on the massed LTE community.

“The fact that it’s called 3G Long Term Evolution is indicative, in my view, of a little sleight of hand here,” he says. “This is not an evolution of 3G, this is a completely new 4G technology that requires investment in a new network. Given that the economic times we’re in at the moment are not easy, the big operators are not looking to invest in a new network any time soon. And that creates a huge opportunity for the alternative operators,” he said.

There’s been a disproportionately high amount of taxi-related stories this week, one of which involves Sprint, which has fitted out more than 6,000 New York City cabs with wireless data connectivity allowing them to offer customers the ability to pay by credit card as well as the more traditional philosophical insights.

In the UK, it has emerged that Londoners leave almost 10,000 mobile phones a month in the back of taxis, which is quite a haul. This was the result of a survey by Credant Technologies, which carried out a similar study in the US. It turns out that yer salt o’ the erf Lahdahn cab dwiver is more given to honesty than his New Yoik altoinative, with more than 80 per cent of London drivers handing in phones found in the back of their cabs compared to just 66 per cent in Gotham.

Oddly, and unrelated to wireless – we think – London cabs have been exploding with some regularity this week. The Informer rather suspects there’s nothing wrong with the cabs, it’s simply that some bumbling liberal has climbed into the taxi and said something along the lines of: “I think it’s wonderful that we’re giving a home to all these asylum seekers. And don’t you think it would be better if we got rid of the Royal Family?”, causing the drivers, not the taxis, to spontaneously combust.

And we’ll end on a driving story this week. British motoring organisation the RAC has concluded a study that reveals text messaging while driving is more dangerous than driving under the influence of alcohol or cannabis. Apparently reaction times in tests slowed by 35 per cent when 17 – 24 year old drivers in a simulator tried to read or write texts while piloting their vehicle. The figure was 21 per cent for consumers of herbal jazz cigarettes and 12 per cent for people that had drunk to the legal driving limit.

A whopping 50 per cent of respondents in the age group admitted to having sent or read text messages while driving. The cretins.

Take care (especially on the roads)

The Informer

* Actually, the Informer made that up.

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