Off their perch

Who’d have thought that the news that would rock the world this week would be of a 71-year-old man deciding to retire from his job? But it did and the telecoms industry seems to have adopted some of the fiery, argumentative, and sometimes hypocritical, qualities of the famous Glaswegian.

May 10, 2013

10 Min Read
Off their perch

By The Informer

Who’d have thought that the news that would rock the world this week would be of a 71-year-old man deciding to retire from his job? But it did and this week the telecommunications industry seemed to have adopted some of the fiery, argumentative, and sometimes hypocritical, qualities of the famous Glaswegian.

While Sir Alex Ferguson called it a day in Manchester, it was all kicking off down under as Australia’s digital dividend spectrum auction saw three operators win spectrum and the Aussie government pocket nearly A$2bn ($2.06bn). But it should have been more, says one consultancy firm, which accused Australia’s regulator of failing to do its job properly.

With 700MHz and 2.5GHz blocks up for grabs, Telstra, OptusMobile and TPG Internet each secured spectrum, regulatory body the Australian Communications and Media Authority (ACMA) announced. Market leader Telstra paid over A$1.3bn for its spectrum, second placed Optus Mobile spent A$650m and fixed line operator TPG Internet became a new entrant in the mobile operator space, securing 2x10MHz of 2.5GHz spectrum for a total of A$13.5m.

But theCEO of spectrum auction planning specialist Coleago Consulting, StefanZehle threw a proverbial pizza slice into the face of ACMA, accusing the regulator of squandering potentially several billion dollars that would benefit the economy as a result of setting reserve prices too high.

Citing a report from operator organisation the Australian Mobile Telecommunications Association (AMTA), Zehle argued that the digital dividend spectrum was estimated to generate between A$7bn and A$10bn.

However, 2x15MHz of 700MHz spectrum remained unsold and Zehle reckons it was because Vodafone Hutchison Australia (VHA) decided not to bid due to the extremely high reserve prices set by the regulator.

“Since VHA ended up without spectrum it will further weaken their relevance in the market. Since competition is likely to have been weakened this will reduce the “consumer surplus” from the digital dividend, in other words, the benefit consumers would gain in form of lower prices.”

And Zehle didn’t mince his words, adding that: “ACMA’s failure could hardly be more complete.”

“The outcome says a lot about politicians’ lack of understanding of how investment decisions are made and also demonstrates an unwillingness to listen to the industry.”

But the plot thickened. Little did Zehle know that ACMA chair Chris Chapman was sat at his PC, reading the comments on, busy drafting his rebuttal.

According to Chapman, Vodafone said in October 2012 that it did not need to buy the spectrum on offer at the auction because it already has enough to provide LTE services in the future.

“Vodafone’s CEO, Bill Morrow, made this announcement two months before the Minister directed the ACMA to set the reserve price for the 700MHz band at A$1.36/MHz/pop,” Chapman said. Fair dinkum, one  might say.

He added that Vodafone had also refrained from bidding for licences in the 2.5GHz band, “even though it is hard to characterise the reserve price for this band (A$0.03 per MHz/pop) as extremely high, and indeed all 2.5GHz lots were sold.”

Chapman added that ACMA expects consumers will benefit from the substantial increase in spectrum holdings for Telstra and Optus. “The ACMA is optimistic that all these companies will investing the community when they commence 4G services, which will further transform the way Australians communicate and do business.”

The Informer understands this saga is not about to end just yet, so watch this space.

The country’s Minister for Broadband, Communications and the Digital Economy, Stephen Conroy also announced this week that an additional 1.3 million Australian households are being added to the country’s National Broadband Network (NBN). This will bring the total number of premises where NBN construction will commence or be complete by June 2016 to more than 4.8 million.

Meanwhile, Australia’s not-so-noisy neighbours New Zealand welcomed CEO of Chinese equipment vendor Huawei, Ren Zhengfei.

With Huawei contracted to build Telecom New Zealand’s LTE network, which is expected to go live in October this year, and also having been selected as a core supplier for New Zealand’s Ultra-Fast Broadband (UFB) initiative, Ren paid a visit to reaffirm Huawei’s commitment to the country.

“New Zealand is one of Huawei’s most important strategic markets and is very valuable to us,” he said. “Huawei has been selected to help build a 4G/LTE and the UFB network in New Zealand. We will continue to deploy world-class, advanced communications technologies here, delivering the safest, most advanced networks for the nation.”

He also addressed comments from the US House Intelligence Committee claiming that the vendor is not to be trusted. He voiced his confidence that none of Huawei’s staff would engage in spying, even if asked to by Chinese security agencies. He added that the vendor is not in a position to collect operators’ network data in the US in any case.

“Huawei equipment is almost non-existent in networks currently running in the US,” he said. “We have never sold any key equipment to major US carriers, nor have we sold any equipment to any US government agency. Huawei has no connection to the cyber security issues the US has encountered in the past, current and future.”

According to the Associated Press, this was Ren’s first media appearance. But in a manner similar to the retiring Scottish football manager, Ren wanted full control at the press conference. No photos, no international media, no interviews, he insisted. Ren also insisted that Huawei has an open, transparent and collaborative approach to cyber security, in a curiously contradictory statement that Fergie himself would be proud of.

Elsewhere, US operator Sprint took a dig at its kit suppliers this week, blaming them for stifling the rollout of its Network Vision project.

Pointing the finger at its three infrastructure partners Ericsson, Alcatel-Lucent and Samsung, the operator said that it had been forced to revise its plans to bring 12,000 multi-mode base stations on-air by the end of 2012, pushing the deadline back to 1Q13.

“The deployment of multi-mode technology is project managed by Sprint but dependent upon three primary OEMs, each of which has responsibility for a geographical territory across the United States,” Sprint explained in the filing.

“We have recently experienced delays with vendor execution, backhaul connectivity delays, shortages in equipment such as fiber cable and antennas, as well as other regulatory and environmental issues.”

The operator added that the delays have caused an increase in depreciation to existing Nextel and Sprint assets.

The Informer tried to get in touch with the vendors involved but Alcatel-Lucent and Ericsson refused to comment, while Samsung chose not to respond to voicemail messages. If it’s half as hard to chase up multi-modal base stations from these vendors as it is to obtain comment on a news story from them, The Informer can’t help but feel a little sorry for Sprint.

Taking a swipe at national authorities seems to be all the fashion these days, as Coleago’s Zehle was joined by Cisco’s chief technology and strategy officer  Padmasree Warrior, who aimed her criticisms at Taiwan’s local government. With a name like that, The Informer suspects Warrior is one not to be messed with.

Fortunately for Taiwan, Warrior’s comments weren’t quite as cutting as Zehle’s. When asked for her advice to the local government she merely argued that better broadband would enable Cisco’s customers and suppliers in Taiwan to operate more efficiently. Faster speeds would help, “transform industries” and “allow companies to have innovative power” in a wide range of sectors such as medicine, education and manufacturing, she said according to local reports.

The comments raised eyebrows as Taiwan is thought of as a technology leader. The country currently has broadband penetration of 78.8 per cent, according to Informa WBIS statistics, higher than the 74.6 per cent of the US, and 70.29 per cent of Europe.

Operator group Telefónica this week extended its vision beyond smartphones and keen to get in the business of provide connectivity to laptops, signed a Europe-wide M2M deal with PC maker Dell. The two are setting out to deliver pay-as-you-go mobile broadband services for notebooks and tablets.

Dell NetReady is a pay-as-you-go connectivity service powered by Telefónica. It uses an M2M SIM-card and an application that allows the customer to choose their own connectivity bundle.

The service is aimed primarily at enterprises, according to Telefónica, which are demanding mobile connectivity solutions that allow their users to connect to the web easily while on the go.

Once registered, pay-as-you-go bundles are available immediately, with plans available for just 30 minutes up to one month. Telefónica has created two separate tariff structures for long term and short term access.

Telefónica wasn’t the only operator announcing an M2M tie-up this week, as AT&T and Deutsche Telekom both extended their M2M offerings.

AT&T extended its M2M agreement with Indian IT and outsourcing outfit Wipro. The two firms are using an M2M platform supplied by cloud-based M2M services and software provider Axeda.

Wipro will help AT&T offer M2M development services and systems integration to the operator’s enterprise customers across all major industries. This will dramatically speed the delivery time and lower the cost of application development and maintenance for M2M applications, according to AT&T.

Meanwhile, Germany’s Deutsche Telekom is to offer a usage-based insurance solution that enables vehicle insurers to offer their customers special benefits for driving safely. The operator has partnered with telematics technology provider DriveFactor to bring to market an M2M solution that evaluates driving behaviour.

The  solution uses a tracking module and a SIM card to evaluate driving data. The pay-as-you drive insurance concept is attractive for insurers and their customers, as drivers will benefit from a reduction in the premium paid in return for taking part in the programme.

“Jointly with our partner DriveFactor we offer insurers a complete single-source usage-based insurance service—from the hardware to integrating evaluated driving data into their IT systems,” says Jürgen Hase, head of Deutsche Telekom’s M2M competence centre.

And in what is arguably the second-biggest management appointment this week, Vodafone announced that telecommunications services provider ACN Europe’s CEO Brian Fitzpatrick will join the firm as group carrier services director.Fitzpatrick will assume the role on May 7, 2013, reporting to Nick Jeffery, group enterprise director.

At ACN Europe Fitzpatrick has been responsible for operations in 18 countries. Prior to that, he was managing director of BT Wholesale Markets.

And the African continent became more connected this week as global telecoms network exchange EpsilonTelecommunications interconnected with both the SEACOM and West Africa Cable System (WACS), giving the company undersea cable connectivity that circumnavigates Africa.

Epsilon, which specialises in managed network services, said it is seeing growth in Africa for its outsourced network service model. African carriers which need to connect abroad are using Epsilon to gain access to 170+ countries and similarly Tier 1 carriers who need a presence in smaller African markets can now use Epsilon to connect in the region.

And finally, after Microsoft CEO Steve Ballmer famously declared in February 2012 that he was “betting the company” on Windows 8, the operating system designed for both PCs and touchscreen devices, the firm has come to the conclusion that actually, it’s not very good. Microsoft announced that it will be making changes to platform in the coming weeks. Awkward.

The move comes on the back of sales of PCs taking a nose dive; global PC sales fell 14 per cent in the first three months of 2013, according to research firm IDC. On the plus side, Microsoft still enjoys over 90 per cent market share in the desktop operating system space, according to web analytics firm Net Applications. So the question now is who, or what, is going to knock it off its perch?

And that’s about all for the week – take care.

The Informer

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