OT DD A Week In Wireless (a weekly email I receive from fiercewireless.com)
After a full year of hype, teasers, hype, leaks, hype, and hype, this week saw the Apple iTunes/Motorola phone finally launched, under the vowel-challenged moniker, the ROKR. Way back when, there were fallings-out between the two firms about whether or not the thing was ready. Then there were ugly rumours that the networks wouldn't cooperate for fear that it would compete away their download services. Now, it's here and it's on Cingular Wireless as of this weekend.
Unfortunately, it seems they might have spent some more time on coming up with a product as compelling as the iPod, as useful as a Mac or as sexy as a RAZR, because finding fans for the ROKR is like trying to keep cool in a heatwave when the man who owns the fan shop has gone on holiday. Regular readers will recall a leak that the iPhone was going to be essentially a plain old Motorola E398 handset with iTunes software. Well, that is precisely what the real thing looks like. There were also some disquieting rumours that Apple planned to limit the number of songs users could sideload to the device, presumably to protect its iPod Shuffle sales. One story put the cap as low as 25 tracks.
That turned out to be pessimistic. In fact, the ROKR E1, is set up to accept a maximum of 100 songs - even if you put a bigger Flash memory card in the thing, the software won't recognise any more. It will ship with 512Mb of TransFlash memory, enough for some 120 songs. Or - depending on price - only 256Mb. There's a camera, GSM/GPRS, and Bluetooth, as well as a USB port. When you compare it to some of the competition, it doesn't look fantastic. Nokia spent the meantime working on its N91, which does 3G and Wi-Fi, carries some 4Gb of storage on a hard disk, and eats any file format including the music thief's favourite MP3.
The Informer, as it happened, recently got his paws on a Sony Ericsson W800i, the Walkman phone (in fact, a teenager he knows got it with a T-Mobile UK contract - don't imagine he gets gadgets on review). And the differences are stark - the W800i, to be brutal, looks cool, oozes 1980s sci-fi, doesn't presume to dictate how much music you stuff into it up to the memory available, packs a 2 megapixel camera and is incredibly easy to navigate.
By some bizarre coincidence, Sony's mainline customer electronics side chose the same day to relaunch the Walkman name with a brace of hard disk MP3 players branded simply as Walkman rather than Network Walkman. How on earth did that happen?
Verizon Wireless was also preparing to leap into music. Its customers are invited to bring in their LG VX1800s to Verizon shops in order to have a music player upgrade installed in advance of the launch of their own download store.
Away from its musical dalliances Cingular meanwhile encountered a sticky problem, as a US Federal court upheld the ruling of a lower court that prepay management firm BCGI had violated patents held by Freedom Wireless over prepaid phone service. Cingular is one of several carriers which use BCGI's software and service, which explains why it is funding BCGI's appeal.
Staying with on the right side of the law, meanwhile, the FCC is going to investigate US interoperator roaming agreements, with a view to dealing with a "rift" between the big national carriers and regional players.
In Hurricane Katrina news, a gigantic network recovery operation is underway. Sprint Nextel possibly had the worst problem, having lost a major long-distance switch, but by earlier this week it had restored service to the Floridian subscribers whom that outage cut off, by rerouting their traffic further afield. Further restoration was described as challenging. Verizon Wireless said on Tuesday that its network was back up in Baton Rouge and Jackson, at Louis Armstrong International Airport, Mandeville, Lacombe, Hammond and Covington, and in some parts of New Orleans itself. The company intends to deploy COWs (Cells on Wheels) in the worst-hit areas. T-Mobile USA said most of its hardware had survived and that cell sites covering key points in the city were now up, one of them running on a generator on a roof overlooking Canal Street.
BellSouth, though, said on Monday that only 650,000 out of 1.75 million subscriber lines down had been restored. Many cellsites depend on the fixed-line operator's fibre for their backhaul. The firm predicted that full restoration might take six months and cost $600 million - a task complicated by the need to provide a further huge number of connections for emergency services and to supply and accommodate its staff in the devastated area.
This week's Skype rumour concerned supposed interest from online junkshop Ebay in a bid for the geek chic VoIP operator. According to the Wall Street Journal, a price of between $2-3 bn was being spoken of in talks that might yet break down. The New York Post, though, claimed it was as good as a done deal and would be worth some $5 bn - but then again, it is a paper that runs headlines such as "Tali-Bam!", so you can make of that what you will. Neither party would comment on the speculation.
Skype boss Niklas Zennström, meanwhile, told a Taiwanese newspaper that "the development of Wi-Fi phones with built-in Skype capabilities will be the focus of our efforts" and that "cooperation with wireless ISPs" would be a key strategy for further development. In further alt.telco news, PCCW's British ISP UK Broadband began rolling out its pre-WiMax wireless internet service around London. 256Kbps costs £10, 1 Mbps £18. The really interesting question, which remains to be thrashed out between UKB, any other WiMax Wannabes, and the regulator Ofcom, is exactly how fixed fixed-wireless has to be. The conditions of the UK's 3.5GHz licences apparently say that service has to be fixed but don't include any clauses that actually ban mobile operation. A source in the WiMax community told the Informer that Ofcom might be "flexible" on that score despite heavy lobbying from mobile network operators.
Skype, meanwhile, got on with the job, inking a deal with Chinese portal Tom Online to push its premium SkypeIn and SkypeOut services there. Unfortunately, for the IP telephony firm, they don't play by the same rules in China. According to local reports fixed line operator China Telecom has simply started blocking access to Skype. The reports also go as far as to suggest that the carrier has created a 'black list' of users and will come down heavily on anyone that tries to circumvent the obstruction.
Just as in the cricket at the Oval, it all seemed to be going so well for the Australians in the privatisation of monster telco Telstra. With outback senator Barnaby Joyce, who holds the balance of power in the Senate, apparently satisfied with the service level guarantees and extra funding offered for his constituents, nothing could now stop the world's biggest ever IPO…until this week happened.
A serious row broke out after top exec Phil Burgess, MD for Public Policy and Communications, wrote an immediately-leaked memo to staff describing how, "our operations and performance are affected by intrusive and unbalanced regulations," and went on to tell reporters that he wouldn't recommend that his 86-year old mother buy Telstra shares. Burgess had already made waves since joining the company last month by saying that if Australia's approach to telecoms had been applied in the rest of the world we would still be using smoke signals and perhaps the telegraph.
It didn't help any that Michael Herskope, director of corporate relations, and Ted Pretty, head of technology, both chose this summer to resign. Burgess's rant was also especially embarrassing because the intrusive and unbalanced regulations he mentioned are chiefly the ones introduced to ensure Senator Joyce's outback constituents get their broadband access. The Australian government poured scorn on Burgess, with Prime Minister John Howard describing his remarks as "careless and foolish" and Federal Treasurer Peter Costello telling the firm to "stick to running a telecommunications company and leave policy to government."
Then it emerged that the board of Telstra had agreed to have CEO Sol Trujillo write to all the US shareholders to warn them that the guarantees might harm their investment. Unsurprisingly, the shares tanked, plummeting below the price the government hopes to sell the firm at. As the week progressed, it became increasingly clear that Telstra management was engaged in a campaign to force the government to change the conditions under which it would be privatised. As well as being obliged to spend heavily on rolling out high-speed data and mobile coverage to the bush, Telstra will have to offer competitors access to its fixed-line networks and split its wholesale and retail divisions, rather as BT was obliged to in the UK.
With the introduction of several pieces of legislation required to privatise Telstra coming up fast, the company announced a profits warning claiming that profits would fall some ten per cent for the year to June, 2006 "because of regulatory proposals." The shares took another five per cent hit on the news. Although Australian financial analysts duly altered their profits forecasts, Macquarie Bank cutting its 2005/6 estimate 15 per cent to A$3.77 bn, there certainly seemed to be something political about the affair. One Australian banker told the Financial Times that it was "an extraordinary game of brinksmanship that would be laughable if it wasn't so serious." Imagine that in an Aussie accent.
The mess just kept growing, as the Australian Securities and Investments Commission was called in to investigate charges of stock-market manipulation against Telstra executives. It emerged that Telstra managers had secretly briefed the Government on the 11th of August (just when AWIW was on holiday - significant?) that serious problems existed at the company. The briefing paper was leaked to the opposition Labour Party on Wednesday, who revealed that the company might need to spend billions of Australian dollars on urgently needed maintenance to the fixed-line and backbone networks and could only pay the dividends the government had promised shareholders by digging into its reserves of cash. However, the Australian stock exchange had been told nothing of this until the surprise profits warning.
Then, the trouble reached Prime Minister Howard himself, as he was accused of "behaving like one of the corporate rogues of the 1980s, not the leader of Australia" by Peter Morgan of 452 Capital, one of Australia's biggest fund managers. On Tuesday, Howard had described Telstra executives as behaving "disgracefully" and said that it was "the obligation of senior executives of Telstra to talk up the company's interests, not talk them down." Morgan's answer: "Without a doubt, it is not the job of a management team to talk up a share price - it is their job to provide honest information to all investors."
Howard later denied that he had suggested that anyone should tell lies. Two bills on the sale of Telstra are now before the Senate, with three others going into the House of Representatives.
It's a considerable relief, then, to get away from all the desert heat, dust, kangaroos and overindulgence in cold beers to the serene calm of old Europe. Germany, in fact, where ambitious plans to launch mobile TV at next year's World Cup seem to be encountering trouble. Although Nokia has already put DVB-H enabled handsets on the market, Deutsche Telekom's IT division T-Systems told the newspaper Handelsblatt that serious problems still exist. For a start, there is comparatively little spectrum spare in the region used by DVB-H. The infrastructure roll-out has not yet begun, and the licences are yet to be allocated by Germany's regional media authorities. According to T-Systems, the roll-out could begin at any time, but so far there is no one to sign the cheques.
O2's German operation became the latest in a string of European operators to offer flat-rate telephony. Users of its Genion tariff will be able to call anyone on-network or on the German PSTN for as long as they like, at a price of €9.99 monthly. The operator also announced the commissioning of a new UMTS router, promising better data rates once it is in operation.
There was bad news for the entire European mobile industry as the European Court of Justice ruled that the tax on base stations applied by two villages in Belgium and the province of Lower Austria was neither a breach of the EU Telecommunications Directive, nor Article 59 (free trade in services) of the Treaty of Rome. The two Belgian communes, a Walloon village and a suburb of Brussels, briefly imposed charges of up to €2,478 for a base station and €123.95 for a dish antenna in the late 90s. Austrian deputy Prime Minister Hubert Gorbach said he still hoped to overturn Lower Austria's decision to impose a similar fee on all installations on their territory, but left open exactly how he might do so.
When the Informer recently spoke to Mobilkom Austria chief Boris Nemsic, he claimed that the controversial tax would take up 40 per cent of the industry's operating profits if (as he expects) it is extended to the whole of Austria. No surprise, then, that he threatened to "fight it with every legal means" and floated the idea of levying roaming charges on users in the province.
In even worse news, British Home Secretary Charles Clarke resumed his campaign to get an EU directive forcing network operators to retain a huge range of data, including the locations of all parties to all calls and even details of unsuccessful calls for at least 12 months, as a supposedly anti-terrorist precaution. Naturally, he expects the industry to pay for this folly. It has been seriously questioned whether it would be technically feasible to search such quantities of data within a useful period of time.
Staying in Britain, O2 has decided to take a leaf out of Ronald McDonald and Colonel Saunders' greasy-fingered book on successful business practices. No, the UK operator won't be putting extra salt on its fries to improve sales in fizzy drinks or even selling its goods on the cheap in a party bucket. The carrier has announced the launch of a national franchise programme for opening stores across the UK. Face-to-face sales is undoubtedly the way forward, but opening up shops is a costly and risky business.
Franchises are, of course, a cracking way of getting someone else to not just do all of the work but take almost all of the risk too. But first you've got to find yourself a mug … someone with enough spare cash and business acumen to make it work. Once upon a time, not so long ago, setting up a shop to sell mobile phones was a sure-fire money-spinner, that's why lots of people set up shops selling mobile phones. But with 100 per cent penetration in the UK, selling phones is a bit trickier these days.
Not quite as tricky as it in Russia though. According to local press, in an effort to combat smugglers the country's two largest phone retailers, Yevroset and Dixis, are no longer going to buy goods from Russian distributors. Apparently, Russia is awash with illegally imported devices, the International Confederation of Consumer Protection Organisations reckons the phones make up about 90 per cent of the country's mobile phone market, which at five per cent customs tax is a lot of Roubles.
Someone else probably coining it in is Christian Lindholm. The man some labelled as the innovator behind the Nokia Series 60 smartphones and the Finnish firm's Lifeblog service, has been snapped up by Yahoo! Lindholm's title at the ISP will be VP of Global Mobile Products. The boundaries are starting to blur as technologies converge, Yahoo! has made a number of recent announcements in the mobile space, as have its chief rivals Google, Skype and Microsoft. There's a lot of money to be made here kids, does anyone spot another bubble in the making?
Also busy reshaping its business this week was France Telecom. The firm has announced the creation of four new functions to drive the implementation of NExT. This is not an attempt by the French telco to branch out into the mid-tier stylish, yet functional and affordable rag trade, but the New Experience in Telecom services (NExT) announced back in June that would apparently, "give customers access to a universe of services that are both high value and simple." Or to put it another way, the rebranding of all of FT's services under one stylish, yet functional and affordable umbrella.
Two firms huddling under the same umbrella this week were Macromedia and Hewlett-Packard. The two lovebirds have announced a partnership that will bring joy and happiness to all those carriers out there desperate to develop next generation services based on the former's Flash authoring software and the latter's service delivery platform.
Speaking of happy couples, another pair unable to keep their hands off each other this week were Diversinet and Gemplus. News of the burgeoning relationship will strike fear into the hearts and minds of thieves and fraudsters everywhere (probably). The pair plan to splice Diversinet's MobiSecure OATH compliant mobile authentication solution within Gemplus solutions for wireless carriers. But the good news doesn't stop there, if you're busy searching for the Elixir of Eternal Youth or maybe you want Nottingham Forest to win the European Cup for a third time your wishes may soon be granted, because Kashif Hassan, president of Diversinet, made this typically understated pronouncement: "The possibilities for carriers to service their markets with our joint offering are endless."
Endless? Surely, nothing is endless.
And with that the Informer bids you a philosophical farewell.
The Informer
Send your feedback to: theinformer@mobilecomms.com
© 2005 Informa Telecoms & Media
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