Hip(CEO)s don’t lie

By The Informer

For an industry run for the most part by grey-suited conservatives, it’s curious that the mobile sector never tires of attempts to hitch itself to trendy bandwagons driven by even trendier bands. What’s more curious however is that none of those collaborations in recent memory (the Informer’s memory hasn’t been that great since the last days of the Grateful Dead however) have amounted to much.

So on Wednesday night the market watched as T-Mobile USA CEO, John Legere, who to be fair is one of the industry’s less grey-suited and conservative execs, took to the stage with Columbian songstress Shakira to announce the carrier’s latest ‘un-carrier’ initiative.

Legere announced that T-Mo USA is cutting data roaming costs for its customers when they are travelling in more than 100 countries worldwide. He described roaming costs as “completely crazy” and “insanely inflated” before announcing that data roaming and text messages would generate no extra costs for “most” users on its Simple Choice plans. Voice calls for these users will be charged at a flat rate of $0.20/minute across the same geography.

In an interview demonstrating the savings that could be made, Legare made a comparison to AT&T, saying that if a customer uses 72MB of data, makes 32 one minute calls, and sends 36 text messages in a day the cost would be $1,150 if the person was in Canada and in Europe, the cost would jump to around $1,500. T-Mobile’s cost on the other hand would be $6.40. But what kind of typical usage is that? Unless you’re a drug dealer, who makes 32 one minute phone calls in a day?

The Informer is suspicious about Legere’s comparison but maybe he shouldn’t be. How’s that Shakira song go? “The hip don’t lie?” And Legere is certainly (relatively) hip…

“The truth is that the industry’s been charging huge fees for data roaming. But what’s most surprising is that no one’s called them out – until now.” Now that’s fighting talk and somewhat hypocritical seeing as T-Mo has been benefitting from those same “huge fees” for data roaming just as much as any of its peers. The Informer wonders what was thought of that comment back at T-Mobile global HQ in Germany, where the executive board is certainly a bit less flamboyant.

He might even have accidentally called out T-Mobile UK, which was in the local papers on Friday morning, when the Essex Chronicle ran a story about a 14 year old girl who had been able to run up a £969 phone bill on her dad’s account while talking to friends about “boy problems”. She’s certainly got 99 problems now.

Meanwhile back at the Legere gig, Shakira, known for being small and humble (so you don’t confuse her with a mountain), said that the partnership was “all about bringing the world closer together,” and allowing her “to share my music in new and innovative ways.” Oh and of course there’s a humanitarian element in collaboration with Shakira’s primary charity, The Barefoot Foundation, which helps to build schools for communities in Latin America.

Does this partnership explain why T-Mo USA borrowed $5.6bn in bonds from its parent company the same day? Perhaps Shakira’s rider is much bigger than she is? We’ll see how this one goes but really, when hasn’t a mobile/singer tie up almost been the kiss of death for the telecoms player in question?

Only last month the collaboration between rapper turned entrepreneur Dr Dre and HTC collapsed as the pair found out that the Beats don’t go on forever, and that appointment of Alicia Keys as Creative Director of BlackBerry really didn’t do any good did it. At the time the Informer noted that the singer-songwriter’s ditty ‘Doesn’t Mean Anything’ was most appropriate for the role.

No, what you need, if you’re a telecoms brand struggling to remain relevant with your audience, is a collaboration with an artiste struggling to remain in touch with reality. Even better, maybe go for a singer songwriter who’s about due a very public meltdown. Justin Bieber or even Myley Cycrus for example. The Informer can imagine it now: Thorsten Heins, or Steve Ballmer or maybe Steven Elop, twerking their way around the stage as a naked, sledgehammer licking Cyrus smashes the company’s dignity into oblivion with a giant Wrecking Ball.

The very thought makes the Informer shudder. Billy Ray would be so disappointed. Sinead O’Connor certainly is, although neither of them have struck a lucrative mobile branding deal.

Perhaps it’s a strategy Alcatel-Lucent should think about, having announced the axing of 10,000 jobs worldwide by the end of 2015. The reduction forms part of the firm’s ‘Shift’ plan to ensure a “sustainable financial future” and a “successful transformation of the company”.

The job cuts will extend to all geographic areas where Alcatel-Lucent operates, with the removal of 4,100 positions in Europe, Middle East and Africa, 3,800 in Asia Pacific and 2,100 in the Americas. By the end of 2015, Alcatel-Lucent said it will have halved the number of its business hubs globally.

Michel Combes, CEO of Alcatel-Lucent, said: “The Shift Plan is about the company regaining control of its destiny,” but the Informer suspects many of those 10,000 employees think there’s one too many ‘Fs’ in the plan name. One wag with an NSN email address wrote in to say that they liked the comments “around the company regaining control of its destiny… sounds very familiar…”

There was a little bit of good news for Alcatel-Lucent however as Telecom New Zealand gears up to launch 4G services in November, counting the infrastructure vendor among its suppliers.

The service follows the February LTE launch from rival Vodafone New Zealand and will initially be made available in Auckland, Wellington and Christchurch from November 12. The service, which uses spectrum in the 1800MHz spectrum band, will be available to both prepaid and pay-monthly customers at no additional cost on the operator’s current plans.

In December last year Alcatel-Lucent ran a trial in the Lower Hutt area of Wellington using the 2600MHz spectrum, while an Auckland trial took place in parts of the North Shore, also on the 2600MHz spectrum, and was conducted by Huawei. Vendors Cisco and Ericsson also formed part of the deployment.

On the other side of the world UK fixed line incumbent BT was going all 4G, having signed an exclusive MVNO agreement with EE to provide mobile communications to its customers and 88,000 employees.

BT already delivers mobile services to business customers under an MVNO deal with Vodafone but that contract was terminated earlier this year. BT said it will carefully manage the change from the current MVNO to EE to ensure a seamless transition for customers, initially focusing on large corporates, the public sector and small and medium-sized enterprises. The company said that “For consumers, it has a strong wifi presence that it plans to build on,” and it is not beyond the realms of possibility that the EE MVNO deal could see BT make a return to the consumer mobile space for the first time in 13 years, when BT spun off O2 (then Cellnet).

BT might be glad not to own spectrum however, if recent murmurings from Ofcom are anything to go by. The UK mobile carrier community is up in arms after the regulator revealed proposals to upwardly revise annual licence fees for the 900MHz and 1800MHz spectrum bands fivefold or more in some cases.

“Spectrum is a valuable and finite national resource, and charging for it can incentivise the optimal use of frequencies,” Ofcom said, no doubt rubbing its hands against the oncoming autumnal breeze. As you might expect the words “excessive” and “disappointed” have already been thrown out by the opcos and some pundits have warned that such price increases would only end up hurting consumers as operators pass the pain along. The licence holders in question have until mid-December to voice their concerns.

In other 4G news Telefónica is getting ready to drop $400m on darkest Peru over the next ten years as it looks to light up an LTE network in the country. The operator said it will provide high speed internet to more than 100 districts in Peru by 2016.

Meanwhile the Informer thought the Spanish mothership really had hired the big guns when he misread a press release title as “Telefónica appoints Master Chief to head financial services team,” which conjured up visions of the battle-suited hero of the Halo series walking into a meeting with terrified banking bigwigs, rifle casually nestled between shoulder and neck. It would certainly give the carriers some much needed clout.

But alas, Telefónica has actually appointed a MasterCard chief to lead its Digital Financial Services unit. Pilar Aurrecoechea has been in the financial services sector for 25 years and will join the operator group’s innovation arm, Telefónica Digital, reporting into Vivek Dev, CEO of Digital Services. Aurrecoechea joins Telefónica from MasterCard where she was general manager for Spain and Portugal.

US chip shop Qualcomm was also hiring this week, having announced the appointment of a former US ambassador to China to its Board of Directors, at the firm looks to expand its footprint in China.

Clark Randt served as ambassador to China between 2001 and 2009, and brings more than 30 years of experience as a diplomat, attorney and businessman with a comprehensive understanding of Chinese industries and businesses to Qualcomm.

From a better understanding of foreign cultures and business practices to a better understanding of the brain, as Qualcomm this week revealed that for the past few years its R&D teams have been working on a computer processor that mimics the human brain and nervous system so devices can have embedded cognition driven by brain inspired computing.

“We want Qualcomm Zeroth products to not only mimic human attributes, but also learn like humans. Instead of being programmed by writing massive lines of code, we’ve developed a suite of software tools designed to teach Qualcomm Zeroth products to understand what behaviour is desired and not desired,” the company said. Apparently the San Diego firm outfitted a robot with a Zeroth processor and placed it in an environment with coloured boxes and promptly taught the robot to visit white boxes only through dopaminergic-based learning, a.k.a. positive reinforcement—not by programming lines of code. This is similar to the positive reinforcement employed by the Informer’s co-workers on a Friday, by plying him with dark chocolate digestives in order to get AWIW written before lunchtime.

On the subject of autonomous thinking machines, Mercedes-Benz was showing off its driverless technology by sending its S500 Intelligent Drive concept car on a 100km trip in the South of Germany.

The luxury car firm set out to re-enact the journey made by Bertha Benz, the wife of the firm’s founder Karl Benz, in 1888 to demonstrate the suitability of the Benz patent motor car for everyday use. 125 years later, Mercedes-Benz has set out to prove a similar point with a driverless car.

Driverless cars operate through use of communicating sensors to ensure safe and efficient travel. Through vehicle-to-vehicle and vehicle-to-infrastructure communication there may be no need for traffic lights and stop signs when all of the cars on the road are driverless. The firm also made the point that “unlike Bertha Benz all those years ago, it did not have the road “all to itself”, but had to negotiate dense traffic and complex traffic situations.”

Expectations for driverless cars to take to the roads in the coming years are high; according the Institute of Electrical and Electronics Engineers (IEEE), and by the year 2040, driverless cars operated using M2M technology will account for up to 75 per cent of cars on the road worldwide.

And from robots doing their own thing to humans doing their own thing. Apparently real time self service (RTSS) is the key to encouraging consumers, especially those who prefer prepayment, to spend more on mobile data consumption, or so says Chinese BSS vendor AsiaInfo-Linkage. The firm commissioned some research from Northstream, which found that operators in Western Europe are missing potential annual incremental data revenues of €4bn.

A shift in strategy is required, the consultancy says. While RTSS deployments have so far focused on opex reduction through attempts to cut customer use of call centres, and Northstream found that mobile operators in Western Europe could stand to save €540m annually with RTSS, the firm argued that the focus should be more on revenue enhancement rather than cost management.

“Our research shows that RTSS has a much larger potential impact on data revenue gain than on opex savings in both the pre- and post-paid customer bases, yet operators are still focussing on opex savings,” said Bengt Nordstrom, CEO of Northstream.

Operators need to drive greater return on their mobile broadband network investments, according to Mohammed Sha, director of product marketing at AIL, and RTSS is the ideal way to enable customers to spend more on data. And while RTSS without parallel back end investment will not reap results, upgrading the back end without RTSS could be just as pointless, he suggested. “Investing in the back end without RTSS is like having great products in the store with no window displays. You’re making it really hard for customers to buy your service,” he said.

AIL’s longer term vision of RTSS is sophisticated and appealing, depicting users converting their unused SMS capacity into a top-up data allowance and gifting it to another customer, possibly paying a small conversion and/or transaction fee for the privilege. In another scenario a user could convert spare voice minutes into a time value for specific application usage, such as an hour of Facebook consumption.

Such capabilities could pave the way for mobile services as tradable P2P commodities, which is certainly an interesting idea. However, question marks hang over both operators’ ability and desire to fulfil these kind of advanced transactions, after all, like Mr Coleman’s mustard business, operators make their money from what customers buy and don’t use.

But perhaps this is exactly the kind of industry shake up tactic you can expect to be championed by someone like John Legere in his next “un-carrier” initiative. There might still be time for Smiley Miley to do a deal.

After all, he can’t stop and he won’t stop. But the Informer can.

Until next week,

The Informer