A fine time

By The Informer

It’s been a week of pecuniary punishments in the Low Countries, with carriers in both Belgium and the Netherlands on the receiving end of regulatory remonstrations. First up was Proximus, a carrier with a name that makes it sound like a character from the film Gladiator. It’s appropriate, really, as the firm – which is the mobile arm of incumbent telco Belgacom and the market leader – seems to feel as if it’s been stabbed in the back by a petty, power-crazed ruler.

In this case, however, it’s Belgium’s National Competition Council cast in the role of assassin. The NCC slapped Proximus with a fine of €66.3m on Tuesday this week, for what it alleges was “abuse of a dominant market position” during 2004 and 2005. Specifically, the accusation runs, Belgacom offered its business users on-net tariffs that were lower than the wholesale rates it was charging to other Belgian operators and MVNOs. Four other charges put forward by the public prosecutor’s office were rejected by the NCC.

The case stemmed from an original complaint made by Belgian underdog BASE three and a half years ago, in which the firm claimed that Proximus’ strategy had forced it out of the Belgian business market. Second placed Mobistar joined forces with BASE, as did a couple of MVNOs.

Proxmius’ response has been scornful indignation and a pledge to appeal. “You can’t just isolate a certain rate, [because] on­net rates form an integral part of the services that Proximus offers its customers,” the firm said in a statement. “The existence of on­net rates is a given in the market, not only in Belgium, but also in many other European countries. Such rates must therefore be considered within the context of the global mobile offering from which the customer benefits.”

Also in the Beneluxian bad books this week was Dutch carrier Telfort, which is being fined €5m by Dutch regulator Agentschap Telecom for not deploying a 3G network in the spectrum it won at auction in 2000 on grounds of hindering competition. A further €5m fine will be levied for every three months in which Telfort does not rectify this or, presumably, until it returns the mothballed spectrum.

Telfort was purchased by Dutch incumbent KPN in 2005, which now operates it as a no-frills sub-brand. There are three carriers in the Dutch market as well as a number of sub-brands and MVNOs and penetration in the country, which has a population of less than 17 million, is well in excess of 100 per cent. So exactly what room remains for further competition is up for debate. Perhaps the issue for the regulator is that 3G subscriptions count for only 20 per cent of the overall mobile market, and it wants to see this increase.

Needless to say, KPN is affronted by the accusation that, as an ex-PTT incumbent, it should be abusing its position (the firm only has half of the Dutch market by subscribers, after all) and it has pledged, like Proximus, to appeal.

You’d think that these two firms, close neighbours that find themselves in similar positions, would have reason to get together and share their woes. But then you’d remember that KPN owns BASE which, as we’ve seen, initiated the action that has resulted in Proximus’ current predicament. There’s some very successful compartmentalisation going on there.

If 3G is progressing too slowly for the Dutch regulator then it might want to take heart from a report by Swedish analyst Berg Insight, which stated this week that HSPA accounted for 11.6 per cent of broadband PC connections in Europe at the end of last year. The number of HSPA connected PC subscribers grew by 74 per cent year on year to reach 14.6 million at the close of 2008, a number that Berg expects to grow to 70 million by the end of 2013.

By then, of course, they’ll all be on LTE, certainly if the likes of Ericsson have anything to do with it. The Swedish vendor claimed this week to have deployed the world’s first “commercial” LTE site in partnership with TeliaSonera in Stockholm. The site isn’t really commercial, though, because nobody’s paying to use it. But the firms have said it will be part of TeliaSonera’s network when it eventually goes live next year.

Despite this open and frank admission that the site will not be in commercial use until next year, Ulf Ewaldsson, VP and head of product area radio at Ericsson, insisted on continuing the vendor trend of elasticizing time. “The unveiling of this site shows that LTE is no longer the story of the future, it is the story of today,” he said (the future, apparently, no longer including years – like 2010 – that have yet to happen).

Also happening ‘today’ by this estimation is AT&T’s 2011 deployment of LTE in the US of A. This week the firm announced plans to upgrade its 3G network with HSPA later on this year in preparation for the move to 4G.

It also said it plans to enhance its 3G coverage by almost doubling the amount of wireless spectrum dedicated to delivering mobile broadband in most metropolitan areas, which should beef up in-building reception. Backhaul will also be upgraded with fibre at thousands of cell sites, with AT&T claiming that the enhanced network platform could allow for theoretical peak rates of 7.2Mbps, although real world speeds are likely to be more pedestrian. Capital investment for these projects fits in 2009 fits within AT&T’s previously outlined targets of $17bn to $18bn.

Strong growth in mobile broadband has been partially stimulated by the burgeoning netbook – or ultra mobile PC –  market and vendors are all trying to predict the next form factor that will prove successful. US chip shop Qualcomm reckons it’s hit upon the answer, with a whole new category of device that falls between the high-end smartphone and the netbook.

It’s called the “smartbook”, which isn’t a very good start.

The smartbook, said senior vice president of marketing and product development at Qualcomm, Luis Pineda, promises “the smartphone experience in a larger form factor” which actually sounds like a disincentive to the Informer. Surely the point of these devices is that you cram in as much as possible into as small a space as is feasible. So what we’ve got in the smartbook is a device that has performance comparable to the performance of a device that has had its performance compromised in order to reduce its physical size, only it’s bigger? Huh?

In fact it all sounds a bit too much like Palm’s ill-fated Foleo strategy – which answered the question: “is it really necessary?” with a resounding “No!” A wide range of netbooks are available for under the $500 mark, many of which boast a fully fledged operating system like Linux or Windows XP, integrated wifi and 3G, and a highly portable form factor. So the opportunities for a smartbook look doubtful.

Nevertheless, Pineda said that around 15 companies are on board with the concept and there are around 30 such devices in development. The first of these will hit the shelves towards the end of 2009.

Qualcomm would not name names, but Acer, Compal, Inventec, Samsung, Asus, Foxconn, LG, Toshiba, C-motech, HTC, Quanta and Wistron are all known users of the Qualcomm Snapdragon chipset, which forms the foundation of the smartbook platform.

“Snapdragon is a key chipset for computing products,” said Pineda, “and we’re now looking at new devices beyond the cellphone, with a larger display, full keyboard, and an enhanced user experience.”

Snapdragon, as a single chip solution combining GPS, multimedia, the processor, wifi and 3G on one chip, promises to make smartbooks lighter, thinner, cheaper and give them a longer battery life. Pineda said voice was likely to be a feature of some of the new devices, and the focus would be on Linux-based operating systems, although the smartbook would be “different from the netbook as it uses the same software setup as smartphones in larger form factor,” he said.

And while the Informer’s in a grouchy mood, let’s look at the latest example of those entities that we’ll all be using our smartbooks to access when LTE coverage arrives sometime in the present. Yup, we’re talking about application stores.

Nokia, the world’s biggest handset vendor, joined the fray on Tuesday morning by opening the doors to its own app store, which is an extension of the firm’s Ovi services platform. The Ovi Store will be accessible to some 50 Nokia handset models, and will feature as a pre-installed service on the forthcoming flagship product, the N97. Nokia reckons that the targetable market of Nokia owners seeking out applications, games, videos, podcasts, productivity tools, and location based services will be in the region of 50 million at launch.

That’s if those users can get onto the site, that is. A flurry of complaints that appeared across the web immediately following the launch suggested that the store was having some teething problems. The majority of these claimed that the site was slow and clunky and appeared to be lacking in content. Attempts by the pale, crepuscular techie at Telecoms.com to access the site online have been abortive so far.

What he has seen seems to be pretty standard fare, although it definitely lacks the polish of the Apple App Store. US carrier AT&T, which was the first in the world to launch the iPhone, confirmed today that it would be making the Ovi Store accessible to its customers later this year. It should be noted, however, that Nokia has very weak market share in the US, which is likely to affect the app store’s uptake in that market.

You might be wondering why it is that the Informer seems to be in a glass half-empty kind of mood. Well, apart from the usual existential despair, there’s being on the receiving end of press releases like the following, which we’re using to inaugurate our new, occasional , possibly never-to-return feature: “daft press release of the week.”

Here is this week’s effort, in its entirety:

Hi,

Please find an announcement below from Vodafone UK. Unfortunately neither party are available for further comment.

++++++

Media Alert

28 May 2009, Major UK financial services company signs three year deal with Vodafone UK.

Lloyds Banking Group has signed a three year partnership with Vodafone for mobility services including voice, mobile email and data services.

++++++

All the best,

A.P.R.

Why bother? That’s the only question the Informer has. Why?

Anyway, let us away to places further flung; to India and Africa where special collaborative breeding programmes look set to create the world’s first elephant with middle-sized ears.

Besides this development, however, the news this week is that merger talks between India’s number one carrier Bharti Airtel and pan-regional MEA specialist MTN are back on after collapsing a year or so ago.

The announcement came in the wake of the carriers each announcing that they have broken the 100 million subscriber barrier. MTN, which also held abortive merger talks with India’s number two carrier Reliance last summer, has agreed to negotiate exclusively with Bharti until the end of July this year.

Bharti is the third largest single-market operator in the world, after China Mobile and China Unicom, while South Africa-headquartered MTN is one of the MEA region’s strongest players, with operations in 22 countries. Combined, the two carriers would rank third in the world in subscriber terms, behind China Mobile and Vodafone.

The proposed deal would see Bharti acquire 49 per cent of MTN and MTN acquire 36 per cent of Bharti, of which 25 per cent would be held by MTN with the remainder held directly by MTN shareholders, Bharti said in a statement.

MTN would pay some $2.9 billion in cash and newly issued shares for its stake in Bharti, while the Indian firm would acquire approximately 36 per cent of the currently issued share capital of MTN for ZAR 86.00 in cash plus 0.5 newly issued Bharti shares (per MTN share). This acquisition would push Bharti’s holding in MTN to 49 per cent.

It all sounds very nice but the deal is not yet done, and it is believed that last year’s talks collapsed over the question of control, a contentious issue that has derailed a number of high profile industry mergers in the past.

Nonetheless, emerging market players have long been expected to mount challenges on established mature market players, trading on the scale they have built in high growth territories. Analysts have pointed to Bharti’s investment in submarine cable as an indication that the firm has truly global ambitions and it is conceivable that the combined firm could make a play for a presence in developed markets.

Finally, we just have space for a classified ad this week.

For Sale: LG Nortel

Majority (50% + 1) stake in profitable, standalone business with strong balance sheet that has not filed for creditor protection. Buyer to collect. With competitive portfolio of wireless, wireline and enterprise solutions, firm is market leader in Korea and select international markets. South facing garden. Great opportunity for new owner to put their stamp on this lovely property. Reluctant sale, will take offers. Interested parties please contact M Zafirovski, or visit www.nortel.com. No timewasters.

Take care

The Informer

Ps – to get your name and your company’s name in BOLD in next week’s A Week in Wireless, simply be the first to respond this film trivia question, included to mark the 357^th edition of the news letter.

From which film comes the following line:

“A .357’s a good weapon, but I’ve seen .38s careen off windshields.”