A Week in Wireless - The vote of confidence

By The Informer

In the world of Association Football, you can pretty much tell when a manager is about to get the boot, so to speak. What happens is that the chairman or the board of the football club respond to well-informed speculation that the manager’s up for the old heave-ho by issuing a public declaration that he has their full and loyal support. Then, a week or two later, they sack him.

The Informer sensed a parallel in the Wireless Premiership this week when Alcatel-Lucent voiced thoughts on its recent poor run of form. Last week reports emerged that Patricia Russo, the firm’s CEO, had been given a month to turn things around – reports that were reproachfully quashed by the vendor’s board on Tuesday.

Billing the stories as “mischaracterised interpretations”, the board got earnest: “While clearly disappointed in the most recent changes in the company’s outlook, the board supports Pat Russo and the leadership team, and the efforts they are making to adapt the company’s plans in light of this year’s developments.” Meanwhile, they were probably setting up a meeting with Guus Hiddink.

If Russo wants some empathy, she could do worse than a get-together with Ed Zander, her counterpart at mid-table neighbour Motorola. Moto’s having a yard sale in a bid to raise enough cash to nurse its ailing handset unit back to health. At the tail-end of last week, after the Informer’s deadline had passed, dammit, the firm announced that it’s to sell its Embedded Communications Computing business to tech provider Emerson for $350m.

The unit has 1,100 employees and, it says here, develops embedded computing platforms for infrastructure and equipment manufacturers in telecoms, medical, imaging, defence and aerospace and industrial automation. It turned over $520m last year.

$350m is a fair old whack but it’s going to take more than that to get Moto back in the competition. Net loss for the second quarter this year was $28m, down from a profit of $1.4bn for 2Q06. Still, Zander’s probably right to take the money and run.

Not unlike Niklas Zennstrom and Janus Friis, the founders of Sounds-Crazy-But-It-Might-Just-Work outfit Skype. It emerged this week that eBay, which bought Skype in 2005, paid a little over the odds for the VoIP business. Well, $900m over the odds, actually. That’s the amount by which the online auction house has written down its $2.6bn investment. Oops.

In light of the project’s failure to deliver, Messrs Friis and Zennstrom were effectively shown the door, but not before they (and other shareholders) were given $530m as a reward for the poor performance of their Sounds-Crazy-And-It-Might-Not-Work venture. Zennstrom’s going to loiter about a bit as a non-exec director while eBay’s chief strategy officer Michael van Swaaij will act as Skype CEO until they find a replacement. Anyone know of a CEO who might be looking for a change of scene?

Maybe eBay should put Skype on eBay. Although the postage costs might be quite high.

Another long shot, vaguely altruistic-sounding venture got some very serious backing this week as BT revealed its allegiance with Fon. Funnily enough, one of BT’s co-investors is Skype, and Google’s in on the act, too.

Spanish outfit Fon is a sort of wifi kibbutz, and claims to be the largest wifi ‘happening’ in the world. The idea is that users – or members – allow access to their domestic wireless broadband service to anyone who wants it and that, if we all get together, there’ll be wifi everywhere you go, man. By the people, for the people, it’s beautiful. Time for a herbal jazz cigarette.

The business model classes users as ‘Aliens’, ‘Linus’s’ or ‘Bills’. If you’re a Linus, you let anyone use your connection for free, in exchange for the same rights on other Linus’s networks. Bills charge people for access at their hotspots and share the revenues with Fon. Aliens are peripatetic and wander around paying for access wherever they go.

The firm should really class its users as ‘Hippies’, ‘Profiteers’ and ‘Tramps’, because the real thinking behind Fon isn’t quite as Haight-Ashbury as some of its followers. In an ideal(ist) world, Fon wouldn’t make any money at all because its users would all be Hippies. We all have to pay for our broadband and so if we were all to share it for free, nobody would lose out. Apart from Fon.

The problem, and for Fon’s founders, the centre of the business model, is that we live in a world of greed. So there’ll be plenty of Profiteers who won’t give their connection up for free and will charge for it, generating Fon’s revenues. The concept is great but it shouldn’t be sold as some kind of telecoms version of All You Need Is Love, because its very existence depends on people withholding something they could easily give away. As for the Tramps, well, ‘spare a bit of wireless access guv?’

Anyway, BT’s bringing some three million broadband users to the party, having come round to the idea after its initial reticence.

Splashing the cash like Zsa Zsa Gabor this week was Nokia, as it continued its gradual shape-shift into service provider. The mighty Finn dropped $8.1bn on mapping and LBS firm Navteq. That’s Nokia’s largest acquisition to date and the gloves are off as the vendor is clearly vying for position with the likes of Google, Microsoft and Yahoo in the services space and its carrier customers in the end user relationship game.

LBS has been a slow build in mobile but with Navteq Nokia gets to branch out a little. In- car navigation is a sector enjoying tremendous growth at the moment so Nokia won’t have to rely on ‘find my nearest’ as a moneymaker.

And, wouldn’t you know it, Nokia also announced this week that is to co-brand a car with French auto-maker Renault. The model in question is the Twingo, which will be kitted out with Nokia hands-free and navigation equipment. Now, at what segment of the market would you aim a car called the Twingo that majors on navigation aids? (Only joking; the Informer gets lost on his way to the bathroom).

Speaking of co-branding and targeted marketing, T&A Mobile Phones (T&A? Who thought that one up?) popped by again this week with its newest Alcatel model. T&A, now only five per cent owned by Alcatel-Lucent, the rest belonging to Chinese outfit TCL Communications, has a unique approach to the handset market. It specialises in producing phones that would have been cutting edge about five years ago.

This isn’t a slight, that’s T&A’s stated aim. “Until not long ago it was feature, feature, feature. But the consumers aren’t always interested. You need to find new ways of differentiating yourself,” Vittorio Dimalro, T&A’s brand manager told the Informer at the launch of the Mandarina Duck handset this week. Not many firms would differentiate themselves by providing less capabilities than their competitors, but there you go. The firm’s happy in its niche and says it’s making a profit.

Mandarina Duck makes posh handbags and T&A is pointing its product at The Ladies. “Typically these phones appeal to females – they’re not interested in the features,” said Dimalro, as the Gershwins’ Try a Little Tenderness drifted into the Informer’s head. “Here is an opportunity to offer this market a lifestyle brand. But it’s like a little Trojan horse because we sell it with features that help drive ARPU.” Okey dokey.

At the opposite end of the spectrum, hi-fi icon Bang and Olufsen released the Seranata handset this week, which will be retailing at a cool £1,000. Like a lot of B&O gear, the phone – co-produced with Samsung – looks a bit like people expected the future to look like thirty years ago. Not for everyone maybe, but it looks pretty cool to the Informer. And B&O is claiming it has top-notch audio quality, which you’d expect, given its heritage.

No matter what phone you have, you might now want to start thinking carefully about what you say into it, and what you send as text or images. In Europe, at least. This week the deadline passed for compliance with the EU Data Retention Directive. This law, which calls for the storage of all sorts of mobile information – who you call, where you are – for a period of up to two years. It’s hardly inconceivable that this could stretch to the content of conversations and messages in the future. It’s depressing, and the ‘it’s for your own good’ line has worn invisible, never mind thin.

Sticking with Europe, last Sunday saw the arrival of Vivian Reding’s much-discussed Eurotariff. It was the deadline by which all EU nation’s carriers had to introduce tariffs no higher than 49 eurocents per minute for calls made abroad and 24 eurocents per minute for calls received abroad – not including VAT.

Now, when you cross an EU border, you should automatically get sent pricing information so you can keep tabs on your spending and avoid the bill-shock.

There’s always one, though, isn’t there. And Reding announced this week that naughty little Belgian Mobistar isn’t toeing the line. If the name and shame isn’t enough to rectify the digression, you’d better watch out Mobistar, because Big Viv will get medieval on yo’ ass.

From a carrier in the doghouse to one that should be getting pats on the back all round. Sweden’s Telia, part of the TeliaSonera group, announced this week that it is now sourcing all of its power from renewable sources. A combination of green technologies, including wind, water, solar and biomass will allow Telia to reduce its carbon dioxide emissions by 20 per cent, effective immediately.

Over the last six years, the firm has cut those emissions by 70 per cent, slashing business travel, downsizing its office space and increasing virtual working, conference calls and PC-based networked meetings. So the firm has earned the right to shout about the benefits to the environment and thereby persuade its corporate customers to do the same using services that they buy from Telia. Neat.

Just a couple of housekeeping points, now. As you may know, the Informer lives on www.telecoms.com for much of the week. From now on we’ll be posting A Week in Wireless as a blog on the site each week as well as sending it out, so if you want to comment, you can do so on the blog. Or you can carry on emailing as you do at the moment.

This week we’ve whacked a few hyperlinks into the text which will direct you back to the site for more details on certain stories if you so desire. Let us know if you find it useful.

Finally, the Informer was contacted by a German friend of his, Karl-Heinz Rumourmonger, who keeps his eyes and ears trained on the wireless space. He drops a few scraps to the Informer every now and again and this week he suggested that US outfit Sprint may be on the hunt for a new CEO. It’s tough at the top.