Just like the bad old days

There was an unwelcome flashback to the grim days of the early noughties this week as struggling vendor Nokia Siemens Networks announced that it is to cut almost one quarter of its workforce. Some 17,000 NSN employees, 23 per cent of the total, are for the chop as the firm bids to try and save €1bn in operating costs by the end of 2013. Analysts speculated that the firm is gearing up for an IPO next year and that the cuts are designed to make it a more attractive prospect to potential investors. Certainly it is widely believed that Siemens has been looking to exit the JV pretty much since it was established in 2007. The two parents abandoned their search for investment in June this year, opting instead to inject $500m apiece into the firm at the end of September.

November 25, 2011

13 Min Read
Just like the bad old days

By The Informer

There was an unwelcome flashback to the grim days of the early noughties this week as struggling vendor Nokia Siemens Networks announced that it is to cut almost one quarter of its workforce. Some 17,000 NSN employees, 23 per cent of the total, are for the chop as the firm bids to try and save €1bn in operating costs by the end of 2013.

Analysts speculated that the firm is gearing up for an IPO next year and that the cuts are designed to make it a more attractive prospect to potential investors. Certainly it is widely believed that Siemens has been looking to exit the JV pretty much since it was established in 2007. The two parents abandoned their search for investment in June this year, opting instead to inject $500m apiece into the firm at the end of September.

In between times NSN was dealt a heavy blow by a strategic shift from LightSquared, which pulled from underneath it a contract reported to be worth in the region of $7bn to deploy the aspiring US carrier’s network.

It’s hard times indeed in the infrastructure market, as usual. Market leader Ericsson reckons it has twice the business of its nearest competitor, Huawei. Meanwhile Alcatel Lucent is gaining traction in the LTE space while NSN continues to struggle.

In the immediate term NSN’s biggest problem is going to be convincing its carrier customers that it can continue to meet their requirements. Managed services are a key part of the infrastructure supplier market today and operators would be justified in asking NSN how it plans to carry on running their networks with only three quarters of its previous human resource.

Ericsson, meanwhile, had another contract win to announce, inadvertently rubbing NSN’s nose in it. Mind you, the Informer’s not sure he’d want to be one of the engineers assigned to the new Iraqi outsourcing project that the Swedish firm is now going to be running.  The deal, with Zain, is worth $650m to Ericsson over five years and extends into the Northern region of Kurdistan. Some Zain staff will transfer to Ericsson but it’s not known how many.

From deals on to deals off and the situation is looking a little bleak for US carrier AT&T, which has been trying for much of this year to seal its acquisition of competitor T-Mobile. This week the two firms withdrew their filings to the FCC regarding the proposed merger, deciding to regroup and offer a renewed proposal that addresses the concerns of the Department of Justice, which objected to the deal on competitive grounds.

Earlier in the week Verizon had announced that it had no issue with the deal, removing one significant obstacle, but the US authorities were not so affable. AT&T is still liable for a whopping $4bn breakup fee – payable to T-Mobile – if the deal doesn’t go ahead. And yet even such a sizeable sum may not be sufficient to sustain Deutsche Telekom’s interest in participating in the US market.

Things are happier south of the border where AT&T has partnered with America Movil to deliver enterprise services throughout the Latin American market, as well as parts of Asia and the Middle East. The two firms gain access to one another’s markets as part of the deal, enabling them to offer the same services to enterprise customers operating in spheres wider than their own.

Sticking with operator alliances, there was word of another mobile financial services collaboration on Monday, this time in Sweden. A mobile payments JV is to be formed by Telia, Tele2, Telenor and 3, which will own equal shares in the organisation.

It was interesting to see 3 participating in this JV given the righteous indignation with which it greeted the formation of a similar play in the UK market last week. Hutchison-owned 3 wasn’t invited to the party in Britain, and so dismissed it as “a cosy collaboration that would  control nearly all mobile wallets in the UK and control and sell adversiters and card issuers’ access to its mobile subscribers.”

The firm’s regulatory director, Stephen Lerner, told Telecoms.com that: “This is anticompetitive and akin to a joint selling arrangement which creates a monopoly in several markets, including mobile push advertising and mobile payments and should not be approved under any circumstances.”

But this kind of deal is ok in Sweden, apparently. Well, a little bird told the Informer that the scope of the two ventures is entirely different in nature, because the Swedish initiative supports a common platform.

Over to the ever-vibrant handset sector now and the news that Vodafone is to be the preferred partner to Sony for the connectivity of the Japanese vendor’s new Vita portable gaming console. The device will be available as wifi only or wifi and 3G, which has become standard for consumer connected devices. It will also have Twitter and Facebook onboard.

Most people look over their shoulder before they say something negative about Apple, but not Bengt Nordström, CEO of industry consultancy NorthStream. Nordström stuck his head above the parapet this week and told Telecoms.com that mobile operators across the world are angered by the way that Apple treats them, despite the reverence with which carriers generally talk about the smartphone market innovator.

““When we hear about operators and how Apple treats them – they’ve never seen anything like that before in the industry,” he said  ”It’s always been a buyer’s market. Carriers have been the kings of the hill; they have been ruling everything, and when somebody comes around and begins to dictate the situation, questioning whether operators should be approved for selling iPhones and asking: ‘Are you good enough to sell our products?’ – that conflicts with the view operators have of themselves.”

It was interesting to hear Nordström voicing a well-known but rarely spoken observation. A couple of weeks ago a spokesman from a heavyweight consultancy told the Informer that. “There is a lot of anti-Apple sentiment among the operators. Apple have treated operators, even on an individual, personal basis very rudely over the past three or four years and they’re all sick to the back teeth of them.” Unfortunately these comments were taken off the record after the fact on the grounds that attribution “wouldn’t be very good for us”. It just goes to show how scared people are at a personal and corporate level, of saying anything against Apple. So well done Nordström.

This week the Informer also spoke with Peter Becker-Pennrich, a man who really knows his onions in the mobile device space. Not surprising really, as he’s director of marketing for Vodafone’s group terminals division.

PBP said that, while the firm has the best product delivered through the best processes in the handset market today, there is a question mark over whether they will continue to have that in the future. “You could argue that the iPhone 4s was a disappointment to many people,” he said.

“The big question will be whether they can replace the genius at the top, keep enough empowerment in the system and at the same time maintain the rigour in their processes. If they can’t you can imagine that all their marketing guidelines, which are very strict and are quite clear on what the different channels can do and cannot do, will be impossible to enforce. And you can already see that in some markets at the edge of Europe or outside of Europe, they are starting to really struggle to maintain the level of control they used to have.”

Could this be the beginning of the slide for Apple? PBP had some fascinating insights to offer on the handset sector as a whole, so keep your eyes on Telecoms.com next week for the full interview. It will be well worth reading.

The Informer was most interested this week to see that a company he’d never heard of before – which is not surprising because it’s the leading bookseller in South Korea – had quietly become the first organisation to bring to market a device featuring a Mirasol display. Mirasol, you may or may not know, is a Qualcomm acquisition from a few years back that has been developing a display technology that promises to offer outstanding savings on battery consumption and improvements in visibility under traditionally difficult conditions like direct sunlight.

Qualcomm has been passing round small, static examples of Mirasol displays for some time at press meets now and has always fended off questions of availability. So it was a little surprising that the market debut should happen in near silence.

“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,” said Ovum analyst Nick Dillon, by way of explanation. “I think they are using the Kyodo product as a soft launch to test it out and to try and generate some interest from 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.”

There is definitely room for innovation in the area of operator customer experience management, too, as the Informer found out this week when he tried to renew his private mobile contract. He feels duty bound to point out that, from here on in, this edition of AWIW contains no news, and only an account of frustrating interaction between customer and provider. So feel free to stop reading HERE.

Still with me? Ok, well it’s Japanese Twitter account holder 02 that the Informer feels sorry for. Poor old 02 (that’s zero-two) must get lots of angry messages from people whose clarity of vision is clouded by the red mist of consumer rage. Keen to vent their frustration at the hapless customer services of UK mobile carrier O2 (that’s o-two), they must be forever skewering 02 by mistake.

In keeping with the Japanese reputation for politeness and calm, 02’s Twitter feed gently points out the difference between him/her and the Telefónica-owned wireless operator, making people like the Informer feel like foolish hotheads.

But still, what a palaver. The Informer’s 24-month contract is up next week and, in the absence of any kind of proactive retention contact from O2, he thought he’d see what’s what.

The first port of call was the carrier’s interactive online chat service. This isn’t something you can just find on the website; it magically appears when something you type into a dialogue box seems to indicate a problem. So if you type “I want to leave O2, how can I get a PAC code?”, you can summon a conversational partner.

Interestingly it seems as if, once you’ve complained about something, the chat facility remains available as an option when you log into your account online, which is pretty clever.

O2’s dial-in customer service menu stresses that all of their call centre reps are UK-based, but there appears to be no such guarantee with the online chat facility. After being shunted around a bit, the Informer was connected to a retention specialist with the promise of a “great deal”. Here’s a cut and paste of one of the comments the Informer received when he mentioned the handset he was interested in:

“Yes that the phone great in demand and very nice phone to pocket in, you can see that this phone is free on £51 tariff Unlimited Minutes and Texts, whereas it cost some one paynet on lower tariff.”

Now the Informer knows that it’s common enough for customer service staff to be based a very long way away from the customer. But surely the Dagoba System is pushing it a bit? And yet reading and re-reading it, the structure of that sentence can only be the work of Yoda.

“There is no try, only do” the Jedi master said in the film. When he’s working for O2 customer service, though, it seems that actually there is no do. What’s more, try appears to be out of stock, as well.

The promised deal didn’t materialise, so it was onto the phones, and a conversation with another retention specialist, this one not lurking behind a dodgy online alias. There wasn’t much of a deal to be had here either, but on the understanding of a next day delivery and a bit of a discount on the device, the Informer signed away another two years of his life.

Obviously the phone didn’t turn up the next day. And the Informer was told by another call centre drone that, in fact, that phone was out of stock and there was no information as to when it would again become available, other than the insight that it would be “at some point in the future”.

At some point in the future. What are we talking about here? I mean, at some point in the future the Informer might think: “bugger this for a game of soldiers, I’m going to go and get my crappy customer service from one of the other UK operators”. At some point in the future phone in question will become obsolete. At some point in the future the Informer will splutter his last and drop dead. At some point in the future the sun will implode, sucking everything in our solar system into a black hole. At some point in the future the human race, having hopefully colonised the planetary systems of other stars in a bid to avoid being caught in the death of our own sun, will have evolved to the point where it is capable of time travel. If this is when the phone will be available, then perhaps future O2 could just pop back to 2011 and deliver it now.

It got worse, because the drone said that the Informer could indeed have the phone if he ordered it online. There were plentiful stocks of the device in question available to fulfil online orders.

But for call centre orders – the only type of order with which you can secure a retention discount – they were coming up empty. There was no explanation as to why the Informer was misled by the retention specialist as to the availability of the handset at the point of contract sign up, possibly because it doesn’t sound too good when the agent has to say:

“I’m sorry sir, they lied to you because they’re incentivised on retentions.”

Whenever the Informer talks to OSS and BSS vendors, they stress the importance of connections between the various back office systems. And boy did this experience highlight the problem. Stock systems weren’t talking to customer service systems. Stocks weren’t being dynamically managed. The Informer had to prove his identity to every person he interacted with, and there were six of those in total. And the end result was O2 getting the sign-up and failing to deliver what it promised.

And this from a company whose motto is “Connected better we are”, at least when Yoda writes it.

Take care

The Informer.

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