Wouldn't it be nice

By The Informer

The Informer was delighted by news this morning that the credit crunch is drawing to a close and that a period of intense economic prosperity is set to begin very shortly and last for some 75 years. No, of course it’s not true, but if you’re anything like the Informer, you’re already heartily sick of reading about the downturn.

Just yesterday a memo went round Informer towers detailing the new rules for overseas travel and expenses, for example. Apparently we’ve got to drink house champagne from now on; the Krug Clos d’Ambonnay’s off the menu. Our nightly hotel suite allowance is down to £5,000, which is an absolute shocker for anyone travelling to the US, given that the dollar’s upped its game. Worst of all they’ve grounded the company air fleet. We’ve got to start using scheduled flights.

So the Informer feels the pain of his industry brethren. Like the brass at Sprint Nextel who this week announced 8,000 job cuts, which is 14 per cent of the company workforce. Or Texas Instruments, which has saddled up 3,400 horses, put a member of its staff on each of them and slapped their well muscled hind quarters (the horses, not the staff) yelling: “Ya! Ya! Go on, now, git!”, while discharging their Peacemakers into the air.

TI has been hit by the global slowdown in handset sales and saw Q408 revenues drop 30 per cent to $2.5bn. Strategy Analytics was the latest number monger to confirm last year’s Q4 slowdown in the handset industry, this week reporting that handset shipments for Q408 fell ten per cent year on year to 295 million.

Sprint, meanwhile, is losing around one million subscribers every quarter and seeing its annual revenue dropping at double-digit rates. The firm has a poor rep in terms of customer service and network performance, which is perhaps why Kathy Walker, Sprint’s chief information and network officer, is one of the 8,000 forced to ride off into the sunset.

Sprint’s competitor AT&T tried to sugar its Q4 pill by reporting a 7.7 per cent increase in net profit for 2008 as a whole. It still had to concede that the last three months were proper stinkers, though, with profits dropping year on year to $2.4bn. Revenues for both the fourth quarter and full year were up, however, by 2.4 per cent and 4.3 per cent respectively, topping $124bn at the end of 2008.

During the fourth quarter AT&T added 2.1 million net wireless subscribers, bringing its total user base to 77 million. The company counted 1.9 million Apple iPhone activations, of which approximately 40 per cent were customers new to AT&T. The company said its iPhone users continue to deliver high-value revenues with ARPU approximately 1.6 times higher and churn rates significantly lower than the company’s overall postpaid subscriber base.

This last fact is not surprising, given that, if you want to buy an iPhone from AT&T, you have to sign your life away like Robert Johnson. Nobody on AT&T’s iPhone package will have been able to churn yet. It’s a bit like saying that gorillas are happy in captivity because they haven’t written to their local government representatives to complain about it.

Even Qualcomm – ordinarily a money factory – has been hit. The firm said Wednesday that net income for the three months to the end of December fell 56 per cent year on year and 61 per cent sequentially to $341m as mobile phone shipments plummeted. “While we continue to estimate healthy growth in the CDMA-device market, we have lowered our shipment estimate for calendar year 2009,” said Paul Jacobs, CEO.

Rival US manufacturer, STMicroelectronics fared little better. The company reported a quarterly net loss of $366m compared to a profit of $20m in the same period last year, while net sales fell to $2.26bn from $2.7bn a year ago.

T-Mobile, meanwhile, is suffering deprivation of a different kind. Like so many rhinoceros hunted for the aphrodisiac trade, the German carrier has lost its Horn. Joachim Horn, that is, the firm’s CTO for the last five years, who is to make like a banana and split, in order to pursue a new professional opportunity outside Germany. We’ll let you know when Horn pops up again – and where.

It’s not all about loss and departure though, and this week the hotbed of activity is the Middle East. Young buck Zain remains on the prowl, and is today believed to be close to sealing a deal that will see it take a stake of unspecified size in Palestinian carrier PalTel, which operates in the West Bank and Gaza Strip. Given the conflict in that troubled territory at the moment, this is not a move for the faint hearted – nor those without robust insurance, bearing in mind the level of damage being sustained by the country’s infrastructure.

And Vodafone’s Mid Eastern march began, with the World’s Largest Carrier by Revenues striking a partnership deal with UAE operator du. Under the deal, the lower case carrier will gain access to Vodafone’s products, services and exclusive devices, while Vodafone gets to daub the UAE liberally with its familiar branding.

At home, Vodafone might have trouble with its brand in Birmingham, a place that residents like to describe as “Englands second city”. The Midlanders, ysee, have decided to ban apostrophes on the citys street signs, and its surely only a matter of time before theyll do away with them altogether. The authorities reckon theres no point bothering with grammar, thisll leave Vodafones logo somewhat lacking. Lord knows what Lynne Trussll make of these developments. Sometimes, in this country, Birminghams populace are made out to be figures of fun. The Informer has no idea why.

Staying in the UK, we could have a comeback on our hands that would put Gary Barlow and the boys in the shade, as incumbent telco BT is believed to be planning a return to the mobile space. According to industry watchers, the carrier has been in discussion with 3UK and T-Mobile UK, which operate a 3G access network in the UK under a joint partnership.It is thought that BT will strike a deal to offer 3G services, maybe mobile broadband, over this jointly-owned network.

The carrier offloaded its own mobile network, Cellnet (now known as O2), back in 2001, but has made its wireless designs known in recent years. In 2005, BT introduced Fusion, an FMC (Fixed Mobile Convergence) service under an MVNO partnership with Vodafone, but the offering has proven disappointing.

“Where there is smoke there is fire,” said Michael Kovacocy, European telecoms analyst and sector strategist at Daiwa Securities. “We are already expecting an aggressive entry by BT into the consumer mobile broadband market shortly. Getting serious about mobile – at a time when mobile operators look increasingly likely to open up their networks in order to drive incremental revenue in a mature market, future-proof against adverse regulatory trends and perhaps most importantly of all strip costs out of their core network and delivery system by integration of fixed and mobile assets – looks like a good move by BT,” he said.

One comeback that is looking more questionable is that of Canadian vendor Nortel. And following developments this week, we can be sure, at least, that it won’t be attempting any kind of WiMAX revival. This morning, Nortel announced that it was getting out of WiMAX altogether, providing more bad publicity for a fledgling technology that is sometimes positioned by its proponents as a viable contender to LTE.

“We are taking rapid action to narrow our strategic focus to areas where we can drive maximum return on investment,” Richard Lowe, president of Nortel’s carrier networks business, said in a statement. Nortel’s already dumped its metro Ethernet business and its WCDMA unit, so at least it’s achieving its narrowing goals. What its focus will be if it survives remains to be seen. And, as a colleague of the Informer’s pointed out this morning, when the firm’s IT guys get round to updating the website, it’s going to have a very clean feel to it.

The announcement is not good new for Alvarion, an Israel-headquartered supplier of WiMAX RAN kit, which entered into a partnership with Nortel in June 2008. Under the terms of the arrangement, Nortel was to channel R&D funding (the amount of which was not disclosed) to Alvarion in order to accelerate WiMAX base station development and increase economies of scale. Nortel was still able to resell Alvarion base stations under the terms of the partnership, but Alvarion was also able to offer customers an end-to-end WiMAX solution using Nortel ASN gateways and CSN (connectivity service network) systems.

With the closure of the Nortel partnership, Alvarion’s ability to penetrate the North American market is weakened. Nortel says it will work closely with Alvarion, however, to transition its mobile WiMAX customers to help ensure that ongoing support commitments are met without interruption. Whether that makes Alvarion feel any better is not clear.

You have to choose your friends carefully, don’t you.

Take care

The Informer