a week in wireless

Voda Fountain

It looks like the news-bots in the Vodafone comms team have had their bonus structures adjusted to incentivise them on a per-press release basis, because the stories have been coming thick and fast from the company’s Newbury HQ this week.

The principal headline grabber came from the carrier’s UK operation, which announced it is cutting out roaming charges ordinarily incurred in 35 countries for holiday-making UK residents. From June 1st to August 31st, the firm said, calls, text and picture messages will be charged at standard domestic rates for both pre- and post-pay users. Business account holders will also benefit, although nobody will get cheaper data access.

What Vodafone is actually doing is waiving the £0.75 charge it levies for any call made or received by roaming subscribers. Calls made to or from the UK, or within the host country are covered. Calls from one foreign country to another are not. In order to gain access to the promotion, customers have to sign up to the firm’s Passport international roaming plan, at no cost.

Hurrah for Vodafone, right? Up yours, European Commission, right? It depends, the Informer supposes, on whether your glass is half full or half empty. A cynic might argue that Vodafone’s only able to make such dramatic price reductions because, like most carriers, its roaming charges have been artificially inflated for years. And you can’t get overexcited about a gift that most definitely does not keep on giving, good, as it is, for only three months.

It’s also a fair bet that Vodafone’s seen some of the research kicking around that suggests Britons’ enthusiasm for overseas holidays has been severely dented. According to one report that appeared in UK broadsheet The Telegraph, as many as 60 per cent of Brits are sufficiently concerned by matters pecuniary, in particular the weakness of the pound Sterling, that they’re considering staying in this green and pleasant land for their holidays, rather than setting up shop – lobster pink and steaming drunk – in an Irish pub somewhere on the continent.

Interestingly, the Informer learned, there was Vodafone Group involvement in this announcement until the last minute. This suggests that it was intended originally as a company-wide initiative but that this was shelved in favour of devolving responsibility to the individual properties. Perhaps not all of them thought it was a good idea – especially the ones who are most likely to import the bellowing herds of Brits abroad.

Appealing to consumers was not enough for Vodafone, though, and it offered its hand also to the mobile application community, promising developers a dedicated channel to market for their products, and the use of key network assets like location and billing. So developers can charge for their applications through Vodafone’s billing system and the carrier can cut itself a slice of the revenues.

Vodafone said it will provide developers with customer-controlled access to network capabilities such as location awareness, enabling them to create more innovative mobile internet services and applications.

The Informer recently spoke to Simon Buckingham, CEO of content specialist Mobile Streams and US-based location firm Zoombak, who described the kind of move being made by Vodafone as essential in a mature industry on the way to commoditisation. “Operators can no longer rely on their old business models where voice, text and roaming were charged at a significant premium. Those business models are end of life now. Operators need to recognise that they have to embrace innovation. And the thing that they have that nobody else has, is control over access to location information. This is the time to make that information available; if they don’t do it now their relevance is going to diminish,” Buckingham said.

Vodafone will make its enhancements through the creation of a set of network Application Programming Interfaces (APIs) which will provide a link between the applications and the Vodafone network capabilities and will work across the entire Vodafone footprint thanks to a new layer of management technology based on Service Oriented Architecture.

The company will offer access to selected network enablers through the Joint Innovation Lab (JIL) initiative, which is due to release a website and a Software Developer Kit this summer.

And the final prong of Vodafone’s news trident this week sees it talking up the benefits of mobile advertising. The firm said that it has expanded its mobile advertising services to 18 of its markets on the back of strong revenue growth in the area. Vodafone said it has run more than 2,000 campaigns in the past year, and is witnessing a shift by some brands towards more sophisticated activities like branded content, sponsored alerts and opt-in push messaging.

Mobile advertising was also in the news this week because of some mixed messages surrounding ad-funded MVNO Blyk. The firm, which has been lauded in some quarters for its innovative business model and its audacity announced this week that it is to extend its offering through a partnership programme with other UK carriers. This combined with the fact that the firm recently downgraded the amount of airtime and text messages that it gives its users in return for pumping adverts into their lives to a simpler £15 month, led to suggestions that it was winding down its direct to consumer offering altogether.

Blyk denied this without actually fully denying it in that the statement it released did not state outright that it would not be discarding its consumer offering. Instead, the firm said, “the MVNO model acts as proof of concept” – which is a marked departure from previous statements.

The firm’s original plans called for replication of the MVNO model in multiple markets but, so far, expansion has been limited to the Netherlands. It looks likely that the MVNO model has proven unsustainable, perhaps because it was ahead of its time, perhaps because it lacked the reach that advertisers look for. The UK customer base remains in the low hundreds of thousands. Blyk itself has suggested in the past that advertisers are more drawn to its service for market research purposes than brand advertising campaigns. Whether or not Blyk will be able to draw other carriers into partnerships remains to be seen. Certainly Vodafone’s announcement this week tends to suggest it’s not looking for any help.

One of Vodafone’s former senior staffers, Rene Schuster, is to head up Telefonica’s German operation, it was announced this week, as the Spanish headquartered player unveiled some solid financials. Telefonica reported a 9.8 per cent increase in net profit for Q1, taking it to €1.69bn

Revenue fell 1. 4 per cent year on year to €13.7bn, largely as a result of currency fluctuations, with Latin America still driving the group’s growth as organic revenue in the region climbed 8.7 per cent, the carrier said. In Europe, organic revenue grew four per cent, driven by seven per cent growth at O2 in the UK and 3.6 per cent growth in Germany.

The company’s total number of subscribers hit 261 million at the end of the quarter, consisting of 198 million wireless subscribers, following 2.4 million net adds in the first three months of 2009. Again, Latin America was the main growth driver.

European telecoms analyst and sector strategist at Daiwa Securities, Michael Kovacocy, said of the results that, “In what may turn out to be one of the toughest quarters of the credit crunch, Telefonica has shown impressive stability through its unparalleled operational diversification. Latin America continues to drive growth forward and has truly become the company’s crown jewel.”

Speaking of Latin America – speaking of crown jewels, come to that – a new phone has been taken to market in Venezuela and it’s causing quite a stir, because it’s named after the male reproductive organ. ‘Verga’ apparently is Venezuelan slang word for what we in this country might call a tadger (the only word the Informer could think of in this instance that might successfully penetrate the spam filters, so to speak) and the phone, dubbed with Vergatorio, is championed by none other than charismatic president Hugo Chavez.

Built by a recently nationalised Venezuelan manufactory called Vetelca, using parts flown in from China, presumably with the help of ZTE, which has a 15 per cent stake in the operation, the phone will retail for just $15. This is believed to be just 25 per cent of the build cost as the phone is being taken to market with a fat state subsidy.

Chavez plugged the Verga, which is a high spec unit for the price, featuring a WAP browser, an mp3 player and a camera on his daily television show, claiming that: “Whoever doesn’t have a Vergatario is nothing.” Lord knows what Dr Freud would have made of that statement. Anyway, it goes without saying (almost) that Chavez expects his new toy to offer stiff competition (Grow up! Ed.).

Onto more sober news and stats revealed this week by Informa Telecoms & Media tell us that global non-voice revenues in mobile hit $188.7bn in 2008, a 24 per cent increase year on year.

While the majority of non-voice revenues are still SMS-based, the balance is shifting. At the end of 2008, $75.1bn, or 40 per cent of overall data revenue stream came from non-SMS services, bolstered by the deployment of technologies such as HSPA and the growing demand for data-optimised devices such the Apple iPhone.

Informa principal analyst, Nick Jotischky, said the advance of mobile broadband has been a key feature of this growth, with Informa putting the total number of subscriptions at 178.2 million at the end of 2008. This represents extraordinary growth given that Verizon, the largest operator in terms of mobile broadband subscriber numbers (24.245 million), only registered its first such subscribers at the end of 2004.

Regionally there is a considerable disparity in the significance of non-voice revenues, with just five per cent of African revenues for 2008 generated by non-voice services, compared with more than 20 per cent for North America.

Sticking in the US, nationwide carrier AT&T announced this week that it is to buy wireless assets from Verizon – including licences, network assets and 1.5 million subscribers – for $2.35bn in cash. The assets, in 79 service areas of the US across 18 states, are principally rural. Verizon is required to offload the properties as part of the regulatory approval of its purchase of Alltel, which was given earlier this year.

AT&T said it expects the deal to close in the fourth quarter of this year and that it will need to spend around $400m converting the newly acquired networks from CDMA-family to GSM-family technology. This process should take no more than a year, the firm said.

The $2.35bn purchase cost will be slightly offset by another deal announced by AT&T that will see it sell certain wireless assets of Centennial Communications Corp. to Verizon for $240 million. This transaction is contingent on completion of AT&T’s acquisition of Centennial, which is still pending.

US carriers would be unlikely candidates to invest in an Iranian mobile licence, but the same cannot be said for MEA specialist Zain. Reports this week put the firm in the running for the third Iranian licence after a consortium comprising Etisalat and Iran’s Tamin Telecom were stripped of the licence after failing to meet obligations.

While details are still sketchy as to exactly what those obligations were, the upshot was that a Zain-led consortium, which came second in the original mobile licence bid, is now in talks with Iran’s Communications Regulatory Authority to thrash out the terms and conditions that would need to be met in order for it to fill the gap left by Etisalat.

And that, as Hugo Chavez might say, is about the size of it.

Take care

The Informer

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