Leaving Las Vegas

By The Informer

All eyes were on the US of A this week as 2014 began in earnest with annual gadget fest CES. The consumer show is famed for transforming Las Vegas into a futuristic wonderland, but this year wasn’t just about robot butlers and TV screens that are larger than your living room; the nation’s operators also used the show as a platform to announce new initiatives, stirring controversy in the process.

AT&T was arguably the busiest of the operators at the show. As well as announcing connected car initiatives and spectrum deals, the carrier drew attention for a scheme to bribe T-Mobile’s subscribers to switch to its network, a sponsored data initiative and for unceremoniously ejecting a rival CEO from its party.

The operator’s Sponsored Data scheme allows private firms to cover the cost of transmitting the content they provide to customers on AT&T’s HSPA+ and LTE networks. The sponsoring company will be billed for the data charges incurred by consumers browsing their content and that data usage will not come out of their monthly wireless data plan.

The operator envisions companies offering to pay for traffic to supply movie trailers, promote games, provide healthcare support to patients and browse mobile shopping sites. Companies with a “bring your own device” policy could also sign up to the initiative to cover the cost for employees using business related services, AT&T said.

Not everyone was impressed by the scheme, with US authorities voicing concern over the threat to the openness of the internet.

Anna Eshoo (bless you), a ranking member of the US Communications and Technology Subcommittee, said in a statement that AT&T’s announcement “puts it in the business of picking winners and losers on the internet, threatening the open internet, competition and consumer choice.

“It’s exactly why net neutrality rules came to exist in the first place and why these rules should apply equally to all forms of broadband internet service,” she added.

Telecoms watchdog the FCC also noticed the announcement and chairman Tom Wheeler told the Wall Street Journal that it is “prepared to intervene” should it be deemed necessary.

The Informer isn’t convinced that the scheme is a threat to net neutrality at all. AT&T has pledged that sponsored traffic will be delivered at the same speed as non-sponsored and zero rating traffic has been around for years. Facebook, for example, has used it extensively (although details of the deals with operators are somewhat clouded)  to enable consumer access to its services in emerging markets. Also, might it not be the case that if, for example, YouTube decided to sponsor data costs for streaming its content, smaller rivals such as Vimeo and Dailymotion could benefit from consumers having more of their monthly data allowance to stream their content?

AT&T also attracted attention by offering to pay T-Mobile customers to switch onto its network in a move that reflects intensifying levels of competition in the US that’s starting to look like a bunch of reality TV contestants having a spat on Twitter.

AT&T announced a campaign pledging to offer T-Mobile subscribers up to $450 each if they switch operator and trade in an eligible smartphone. Any who do will receive a promotion card worth up to $250 when they trade in their current smartphone, based on the value of the device, and they will then receive an additional $200 credit per line to cancel their contract, switch network and opt for either AT&T’s Next plan, buy a smartphone at full price or activate a device they already own.

This did not sit well with John Legere, CEO at T-Mobile USA, a man who clearly loves a public scrap and knows how to handle attention. Often pictured wearing a black leather jacket and a pink branded T-Mo-T-shirt, with his long, dark hair swept back, Legere looks a little bit like Gene Simmons. Certainly he’s positioning himself as the Rock n Roll rebel of carrier CEOs. He responded to AT&T’s news first by issuing a provocative statement to the press.

“This is a desperate move by AT&T on the heels of what must have been a terrible Q4 and holiday for them,” he said. “I’m flattered that we have made them so uncomfortable! We used AT&T’s cash to build a far superior network and added Un-carrier moves to take tons of their customers – and now they want to bribe them back! Consumers won’t be fooled…nothing has changed; customers will still feel the same old pain that AT&T is famous for.”

The cash he’s referring to is the breakup fee that AT&T had to pay T-Mobile after their merger was called off. Can you imagine what it would have been like if those two had actually got together. It would have put Burton and Taylor in the shade.

Legere added that T-Mobile would retaliate with news of its own at CES, and it wasn’t an empty threat. The firm responded in kind with an announcement that it too will offer to pay all rivals’ subscribers to switch to its service.

The operator is offering to pay early termination fees of up to $350 for individuals or families who want to switch from AT&T, Sprint or Verizon to T-Mobile’s Un-carrier plan. In addition the operator is offering up to $300 in credit when they trade in an eligible handset.

Legere then went a step further and decided to gatecrash AT&T’s CES party on Monday. A journalist from consumer tech website Cnet posted a photo of Legere at the party, wearing his pink branded t-shirt, which alerted AT&T’s PR team, who promptly had security escort him off the premises. Legere claims he wasn’t looking to make a scene, he “just wanted to hear (rapper) Macklemore”, who was performing at the party, he told tech site Re/code.

He then pulled no punches in his press conference at CES, reportedly threatening to send a cease and desist letter to AT&T telling them to stop their ads saying they are the fastest.

According to various sources, he also said that “the family plan is one of the biggest evils in this industry” and labelled the idea that such plans offer lower prices to consumers as “total horse s#!t”.

“The family plans have forced the people in the family to think each other is the problem with the limitations on their data,” he added.

He also labelled rival operator Sprint as “a pile of spectrum waiting to be turned into a capability” and said that AT&T is a “source of amusement” to him, labelling its Sponsored Data initiative as the “biggest horse sh#t in the world”.

Legere also provided much entertainment and commentary via his Twitter account.

One tweet that caught the Informer’s eye was: “Thanks @ATT – we took your spectrum, your cash and gave our customers (your former customers) the Fastest 4G #LTE Network in the nation!”

And in reference to his Batman themed Twitter background, he tweeted: “I’m not saying I’m #Batman, but has anyone seen #Batman and me in the same place at the same time? #mindblown”.

With the retirement of Microsoft’s Steve Ballmer the industry has been missing a character to go all Charlie Sheen every now and again. And it looks like we’ve found one.

In other amusing news film director Michael Bay was left dangling when his auto prompt failed at the launch of a Samsung TV. Bay fled in embarrassment and, despite searching the internet, the Informer has not been able to find any story relating to this with the headline: “Bay Leaves”. Simply inexplicable.

AT&T also made announcements that did not cause so much consternation. One was a deal to acquire 49 Advanced Wireless Services (AWS) spectrum licenses from US telco Aloha Partners II. The transaction is subject to regulatory approval and is expected to close in the second half of 2014. Financial terms were not disclosed.

Meanwhile T-Mobile will pay $2.365bn to Verizon for 15 lower 700MHz A Block licenses and under the second, Verizon Wireless will transfer eight further lower 700MHz A Block licenses in exchange for various AWS and PCS licenses in markets including Los Angeles, San Francisco, Dallas, Atlanta and Detroit. The deals are subject to regulatory approval and are expected to close in the first half of 2014.

The Informer warned you AT&T had been busy this week and the operator also stepped up its focus on the connected car market, announcing at CES the launch of a modular connected car platform.

The operator’s AT&T Drive platform packages connectivity, billing, data analytics and infotainment to car makers and developers to create their own customised offerings, and was developed with Ericsson. .

From the car to the train, now and to Eurotunnel, the group that operates the transport network in the Channel Tunnel between the UK and France. Eurotunnel said that UK operators Vodafone and EE have signed ten-year agreements to offer their subscribers 2G and 3G services while travelling on the rail line under the sea. The service will begin in March 2014. Eurotunnel said it also held talks with O2 and 3UK  but is yet to reach an agreement with either operator.

Vodafone and EE will offer services to customers travelling from the UK to France. Upon disembarking in France subscribers must then rely on roaming services. UK subscribers must also use roaming services on the return journey, as Eurotunnel struck similar agreements with French operators, Bouygues Telecom, Orange and SFR for the South running tunnel in 2012.

A source tells the Informer that Vodafone and EE acted now because Eurotunnel had informed UK operators that if they did not do so, it would offer both tunnels to the French. We can’t have that now can we! Except that EE is half owned by Orange anyway. The source also expects O2 will sneak in to provide coverage with its RAN sharing agreement with Vodafone.

Two new operator CEOs were also crowned this week. Norwegian group Telenor has named a CEO for its Indian subsidiary Uninor following the resignation of former CEO Yogesh Malik in November last year. Morten Karlsen Sørby will take on the role effective immediately. Sørby joined Telenor in 1993 and has been a member of the Telenor’s group executive management team since 2003. Malik had resigned citing personal reasons.

In Belgium, operator Belgacom appointed Dominique Leroy as its CEO, following the firing of former CEO Didier Bellens. Leroy joined Belgacom in October 2011 and has been EVP of the operator’s consumer business unit since June 2012. Previously, she had worked at Unilever for 24 years eventually holding the position of managing director of Unilever Benelux.

Belgium’s state government is the largest Belgacom shareholder and prime minister Elio Di Rupo announced the news via his Twitter account adding that he wishes her every success. Bellens was fired following his public criticisms of the Belgian government and Di Rupo in particular, so the PM probably enjoyed that tweet.

BlackBerry also appointed a head of devices as part of its management shake up. Ron Louks will join the firm as president for devices and emerging solutions, reporting to executive chair and CEO, John Chen, as the firm looks to reverse its fortunes. Louks was previouslyCEO at training firm and consultancy The OpenNMS Group. He has also served as chief strategy officer of HTC America and CTO at Sony Ericsson.

Meanwhile, Orange acquired a minority stake in Japanese cloud-based gaming specialist G-cluster for an undisclosed sum. The operator said that cloud gaming represents an important opportunity and will expand upon an existing agreement whereby G-Cluster provides software services to Orange.

Taiwanese handset maker HTC has announced an unaudited operating loss of NT$1.56bn (US$51.9m) and net profit after tax of NT$0.31bn for 4Q13, missing analyst expectations. The firm’s total revenues reached NT$42.89bn during the quarter. Tony Cripps, senior analyst at research firm Ovum said that HTC is providing an interesting case study in what it takes in order to succeed in the handset space.

“A lot of HTC devices have been very highly rated by reviewers so it is not immediately clear how a company with a reputation for producing such high quality devices is in this kind of financial trouble,” he said.

“The most obvious truth this shows is that scale and marketing budget are now all important. It also shows how HTC and other such companies are disadvantaged by being pure handset players.

And chip maker Intel showcased designs for wearable devices at CES. The firm also demonstrated Edison, a dual core PC with built-in wireless capabilities in an SD card form factor.

Intel CEO Brian Krzanich said the firm is actively pursuing initiatives aimed at accelerating innovation in wearable devices.  In his keynote speech, he highlighted number of wearable reference devices, including earbuds that provide biometric and fitness capabilities, a headset and a wireless charging bowl.

Meanwhile leading tech firms announced a team up with automotive manufacturers to create an industry alliance aimed at bringing the Android platform to connected cars. Audi, GM, Honda, Hyundai and Nvidia have joined Google to form the Open Automotive Alliance (OAA). The group is dedicated to delivering a common platform that will drive innovation and make technology in cars safer and more intuitive, bringing the Android platform to cars this year.

The first week of the year is traditionally one in which consumer electronics firms showcase futuristic technologies at CES, and there were a number of wacky inventions on show this year. According to the BBC, one gadget showcased at the show was an add-on that transforms smartphones into a medical diagnostics tool, similar to the tricorder used in Star Trek. The scanner can be held to a patients head and it will check their vital signs, such as heart rate, temperature, blood oxygen levels and respiratory rate.

German automaker BMW demonstrated a self-driving car that is able to “drift” in the way seen in the Fast and Furious movies and a US firm showcased a smartphone case that turns smartphones into stun guns. And, as usual, there were robots. The Guardian reported that this year there was one that will clean your barbecue, a robot window cleaner, one that was designed to carry your groceries and a programmable DIY robot kit. Amusing, but not groundbreaking. The Informer doesn’t think it’s time to hail our robot overlords just yet.

Finally this week, O2 UK quietly announced that its mobile wallet service is to shut down at the end of the first quarter. The firm told customers in an email that changes in the market and at O2 had left it wanting “time to look into new and better ways to help people manage their money on the move.” It was upon receiving this email that customers remembered they’d downloaded the app when it launched 18 months ago.

So the customers went and had a look at the optimistically titled FAQs. One of these was “What do I need to do now?” to which the answer might reasonably have been: “The same as you’ve been doing all along – absolutely nothing.” O2 didn’t want to give out its O2 Wallet customer numbers, which is hardly surprising.

The UK mobile payment sector has made slow progress and the role of operators in its future has long been a source of questions. The UK mobile operator m-commerce collaboration Project Oscar, renamed Weve this time last year and repositioned as a marketing play, will begin enabling payment from the mobile device some time this year, apparently, according to comments from Weve CEO David Sear that feature in a video the organisation released in November last year.

But the UK Payments Council, a bank-funded, voluntary membership organisation incorporated to oversee and improve UK payment services, has compiled a database of UK mobile phone numbers matched to users bank account details and plans to launch mobile payments by April this year.

In markets like the UK organisations for which payments are non-core are going to struggle like mad to compete with existing and perfectly functional solutions. And as mobile gets absorbed by the payment incumbents the need for the operator becomes less and less clear. And you can take that to the bank.

Take care

The Informer