Mutual Assured Destruction

By The Informer

There’s a cold breeze blowing past the Informer’s typewriter and, unfortunately, it’s not the air conditioning. It’s the icy wind drag created by a telecoms industry hurtling back to the future by re-creating the glory days of the Cold War.

With the current craze for nostalgia ripping around the world, it was only a matter of time before the mobile industry got in on the act. But any fool can churn out Keep Calm and Carry on mugs or recipes featuring five ways with dried egg; real talent, as St. Steve of Cupertino once said, ships. And in this instance, the talent is going large and shipping us a redux of the nuclear arms race, only this time using the slightly less toxic weaponry of patents and legal suits, as seemingly everyone who is anyone in the industry has a legal axe to grind with their competition.

In the absence of a SALT 1-type non-proliferation agreement, the Informer is finding it increasingly difficult to keep up with all the handbag slinging. This week it was Research in Motion’s turn. Already under pressure from declining sales and a pending class action suit from disgruntled shareholders, RIM can now add a patent infringement suit from audio bigwig Dolby to its ever-lengthening list of woes.

The lawsuit, which was filed jointly in America and Germany this week, centres around patents for audio compression technology that allows for high quality sound using limited wireless bandwidth and storage space. In addition to financial damages, Dolby is looking to halt sales of RIM devices alleged to be using the technology. If only Dolby had heard that O2 and, indeed, RIM itself were pulling dodgy/undesirable Blackberry PlayBooks off the shelves, it could have saved itself a few quid on the legal fees.

On the very day it was due to launch the PlayBook in the UK, O2 announced that it wouldn’t be selling the device after all because “unfortunately there are some issues with the end to end customer experience.” Following mixed reviews and less-than-stellar sales, RIM received a further kick where it hurts with the news that some of the devices were shipped with an unstable OS that prevented the proper loading of software on the initial set-up of the tablet. At time of writing, RIM had announced the recall of 1,000 of the devices but claimed that most of the faulty ones were still sitting in distribution channels and hadn’t even been sold yet.

Staying on the patents front, fading giant Nortel has become the tech-industry’s answer to a crack house in a dodgy neighbourhood as some of the industry’s biggest guns line up outside to score a little candy from its massive patent supply. Google, at the top of the queue holding $900m in its hot little hand, has said it needs the 6,000 patents in order to be able to fight off legal suits from a growing number of competitors claiming that Android infringes on their intellectual property rights. As if to prove the search big wig’s point, Microsoft, HP, Motorola Mobility and Nokia are ganging up to oppose the pending sale. According to Microsoft, a deal struck between Nortel and it in 2006 gives it a “worldwide, perpetual, royalty-free licence to all of Nortel’s patents” and this agreement is binding, regardless of who buys the IP.

Google’s bid was approved by the courts overseeing Nortel’s bankruptcy proceedings in Canada and the US early in May, but the saga didn’t end there. With Apple, RIM, Nokia and Mircosoft all rumoured to be sniffing around the sale room, the proposed of June auction has been postponed due to “significant levels of interest.” Whatever happens, Google stands to turn a profit: its bid comes with a $25m “break-up fee” that will see it walk away with at least some cash should another bidder prove successful.

If Google’s feeling like it’s on the verge of a sweet deal, Telcordia must be grinning like the proverbial Cheshire Cat, following its $1.15bn, all-cash sale to Ericsson. The deal, which will take full effect in the first quarter of 2012, will see approximately 2,600 employees move to the Swedish kit maker. Ericsson CEO Hans Vestberg said the deal reflected the growing importance of operations and business support systems in an environment where “more and more devices are connected, services become mobile and new business models for mobile broadband are introduced.”

Vestberg also pointed to Telcordia’s established position in North American and other markets as well as its “good multi-vendor product portfolio” as key elements of the deal. “We have global presence and scale, global service capabilities and superior knowledge about networks and network performance, as well as an already established position in the OSS/BSS space,” he said. “It is a perfect fit.” Telcordia CEO Mark Greenquist said that the deal would drive the joint expansion of offerings to “manage the world’s most dynamic networks.”

According to Ericsson, OSS and BSS are critical to the success of operators seeking to handle data traffic growth and device proliferation whilst simplifying the processes that support business. Ericsson said that the market for software and systems integration in 2010 was worth about $35bn and expected to show a compound annual growth rate of 6-8 per cent through 2013. The company added that “there is an attractive market” for outsourced and hosted managed services, growing in the same range.

Also growing is the m-wallet phenomenon. This week, the UK’s three biggest operators – O2, Vodafone and T-Mobile / Orange parent Everything Everywhere – launched a standalone m-commerce joint venture designed to provide a single contact for advertisers, marketing partners, retailers and banks to create m-commerce products and services. Cashing in on the m-wallet craze, the JV will target companies and organisations that provide anything from credit, debit and loyalty cards to membership cards and transport tickets, allowing them to create secure mobile versions of their products.

Consumers will be able to use their phones to pay for goods, services and travel using NFC contactless technology, or online via mobile or PC. Offers and coupons will be delivered directly to consumers’ phones while companies will have a single touch point to book advertising space and create campaigns as well as provide these offers. The operators will maintain their place in the value chain by making sure the secure element is SIM-based, so it can be used regardless of which NFC-enabled device or mobile network they are using.

It was some fury that greeted the International Multimedia Telecommunications Consortium’s (IMTC) announcement that it had completed a “first ever” on the VoLTE front at its SuperOp testing event in Huawei. Within about a nanosecond of the story appearing on telecoms.com, Verizon, Ericsson and Hong Kong-based Telstra subsidiary CSL were all in like Flynn to let us know that they’d conducted the first VoLTE calls.

Verizon pointed to calls made at its Basking Ridge HQ on February the 8^th this year as the true “milestone” for successful voice over LTE. CSL, meanwhile, was very keen to establish its credentials by sending the Informer a video clip of its “first” VoLTE call, made at the GSMA Mobile Congress Asia event in November last year. But even that was eclipsed by Nokia Siemens Networks and Samsung, who did the VoLTE business at the CTIA Wireless event in March 2010.

As with so much in life, the devil’s in the detail. Unlike life, however, everyone gets to be a winner, as the GSMA’s Dan Warren told us that each claim is correct in its own right. Samsung-NSN demo’d VoLTE voice calling on laptop clients; CSL achieved the first call on an operator-hosted IMS implementation, plus video, while Verizon Wireless, ALU and LG demo’d VoLTE and video on handsets over a live network. The IMTC, meanwhile will be allowed to retain their particular first-past-the-post claim because they demonstrated multiple handset interoperability using VoLTE.

Warren said that “we all need these milestones, past and future to get to a point where we can start to see an ecosystem” begin to develop,” but also pointed out that the real fun will start “when the voice calls become part of something bigger, and that is ultimately what VoLTE is going to be all about.”

And speaking of fun, it has not escaped The Informer’s attention that it is, in fact, Friday. As thoughts of libation drift towards front of mind, a little something to take the chill out of the air won’t go amiss, so that’s about it for the week.

Take care,

The Informer