EURO 2012 The single European currency is in turmoil, but overseas inves- tors are still keen to try their luck in the telecoms space NEWS IN BRIEF 3 Timeline A round-up of some of the major stories reported in our daily news service www.totaltele.com BUSINESS & FINANCE 7 European tour America Movil’s bid to boost its stake in KPN forms part of a wider trend of cash-rich emerging market investors looking to take on Europe. REGULATION 10 Sinking funds Investors are weighing in on the debate in Europe over incentivising the deployment of next- generation access networks. MANAGEMENT WORLD 13 Keeping it real Some look to complex support systems to deliver a good customer experience, but for others focusing on the basics is the way to go. STATISTICS 14 Prime numbers Vendor headcounts, carrier WiFi kit, tablet take-up, LTE subscriptions, and CIOs talk technology budgets LEADER CONTENTS Mary Lennighan Editor Total Telecom BUSINESS ANALYSIS FOR TELECOMS PROFESSIONALS JUNE 2012 W e’re halfway through what is turning out to be a pivotal year for the European Union. Greece is on the verge of pulling out of the euro and returning to the drachma, there are warnings that debt-ridden Spain could follow suit, and as this June issue of Total Telecom+ goes to press the people of Ireland are in the polling stations voting on Europe’s fiscal treaty that will limit national budget deficits. The telecoms industry has in recent years represented a relatively safe haven to investors, attracted by strong cash flows. But at a Total Telecom/ETNO Regulatory Summit in Brussels late last month the investment community issued a strong warning: languishing share prices and poor returns mean “investors have had enough”. To make matters worse Europe’s telcos still lack coherent rules covering the rollout of fibre networks and access to the existing copper infrastructure. With no clear regulatory picture, Europe risks becoming a broadband back- water compared with the rest of the developed world (see story p.10). Cash-rich emerging market investors are quietly moving into Europe But while the banks and the financial analysts bemoan the state of the market, a group of cash-rich, and expansion-hungry emerging market investors are quietly build- ing up their stakes in Europe’s undervalued telecoms operators. Mexican billionaire Carlos Slim was the latest to make a move, launching a partial tender offer to increase his stake in Netherlands- based KPN to up to 27.7%. Analysts suggest he could be looking to give rival Telefonica, which competes with his America Movil across Latin America, a “bloody nose” on its home turf (p.7). Finally, despite the overwhelm- ing presence of banners, posters and flyers urging people to vote either ‘yes’ or ‘no’ in the Irish refer- endum, it would have been difficult to overlook the arrival of TM Forum’s Management World show in Dublin last month. One of the key threads running through this year’s event was the need for opera- tors to focus on customer service. As our story on p.7 shows, for some that requires complex support systems, while for others it’s more about network quality, customer care, and clear tariff packages. Management World is moving back to its long-time home in Nice next year. It’s a tough call whether semi-guaranteed good weather matches up to the presence of cold glasses of Guinness on the show floor. Cheers! n CLICK HERE TO READ ON YOUR IPHONE/IPAD
Transcript
EURO 2012The single European currency is in turmoil, but overseas inves-tors are still keen to try their luck in the telecoms space
news in brief
3 Timeline A round-up of some of the major stories reported in our daily news service www.totaltele.com
bUsiness & finAnCe
7 European tour America Movil’s bid to boost its stake in KPn forms part of a wider trend of cash-rich emerging market investors looking to take on europe.
regUlAtion
10 Sinking funds investors are weighing in on the debate in europe over incentivising the deployment of next- generation access networks.
MAnAgeMent world
13 Keeping it real some look to complex support systems to deliver a good customer experience, but for others focusing on the basics is the way to go.
stAtistiCs
14 Prime numbers Vendor headcounts, carrier wifi kit, tablet take-up, lte subscriptions, and Cios talk technology budgets
lEadER cOntEnts
Mary lennighan Editor
Total Telecom
BUsinEss analysis fOR tElEcOMs pROfEssiOnals JUNE 2012
we’re halfway through what is turning out to be a pivotal year for the
european Union. greece is on the verge of pulling
out of the euro and returning to the drachma, there are warnings that debt-ridden spain could follow suit, and as this June issue of Total Telecom+ goes to press the people of ireland are in the polling stations voting on europe’s fiscal treaty that will limit national budget deficits.
the telecoms industry has in recent years represented a relatively safe haven to investors, attracted by strong cash flows. but at a Total Telecom/etno regulatory summit in brussels late last month the
investment community issued a strong warning: languishing share prices and poor returns mean “investors have had enough”.
to make matters worse europe’s telcos still lack coherent rules covering the rollout of fibre networks and access to the existing copper infrastructure. with no clear regulatory picture, europe risks becoming a broadband back-water compared with the rest of the developed world (see story p.10).
Cash-rich emerging market investors are quietly moving into Europe
but while the banks and the financial analysts bemoan the state of the market, a group of cash-rich, and expansion-hungry emerging market investors are quietly build-ing up their stakes in europe’s undervalued telecoms operators.
Mexican billionaire Carlos slim was the latest to make a move, launching a partial tender offer to increase his stake in netherlands-based KPn to up to 27.7%. Analysts suggest he could be looking to give rival telefonica, which competes with his America Movil across latin America, a “bloody nose” on its home turf (p.7).
finally, despite the overwhelm-ing presence of banners, posters and flyers urging people to vote either ‘yes’ or ‘no’ in the irish refer-endum, it would have been difficult to overlook the arrival of tM forum’s Management world show in dublin last month. one of the key threads running through this year’s event was the need for opera-tors to focus on customer service. As our story on p.7 shows, for some that requires complex support systems, while for others it’s more about network quality, customer care, and clear tariff packages.
Management world is moving back to its long-time home in nice next year. it’s a tough call whether semi-guaranteed good weather matches up to the presence of cold glasses of guinness on the show floor. Cheers! n
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Voda faces $3.75bn tax billthe indian government said it will send Vodafone a demand for $3.75 billion if parliament approves a retroactive tax bill. the demand will include basic tax of about $1.48 billion, a penalty of a similar amount and interest charges of about $790 million.
...says India IPO unlikelyMeanwhile, Vodafone india said it is unlikely to launch an iPo this year, since it will have other issues to deal with.
Argentina fines Telefonicatelefonica was fined 185 million pesos ($41.7 million) for a mobile outage in Argentina in April.
Vodacom on M&A trailsouth Africa’s Vodacom said it is looking to grow its operations in Africa and as such is looking for acquisitions at around the $100 million mark.
Business
LightSquared goes Chapter 11troubled Us mobile venture lightsquared filed for Chapter 11 bankruptcy protection to give it time to resolve regulatory difficulties. it plans to continue operations.
Bharti buys Qualcomm unitsbharti Airtel agreed to acquire a 49% stake in Qualcomm’s indian broadband wireless access businesses for around $165 million. it will fully own the units by the end of 2014.
Google closes Moto buygoogle completed its $12.5 billion acquisition of Motorola Mobility and named a new Ceo for the unit, google insider dennis woodside.
America Movil to up KPN stakeMexico’s America Movil offered €8 per share to increase its holding in netherlands-based KPn to 28% from 4.8%.
EU OKs roaming capthe european parliament voted in favour of new roaming price limits, including a cap on data roaming. the new rules, which were rubber stamped by eU leaders, will come into effect on 1 July.
US mobile merger mooteddeutsche telekom is reportedly in talks that could see it merge its t-Mobile UsA unit with MetroPCs. Meanwhile, Ceo rene obermann said that a complete sale of the unit is unlikely.
Qtel gets Tunisia licencestunisiana, owned by Qatar’s Qtel, was awarded 3g mobile and fixed-line licences in tunisia. it already provides second-generation mobile services in the country.
Hungary passes telecoms taxthe Hungarian parliament approved a new tax on voice calls and sMs in a bid to make up a budget revenue shortfall.
Cloud dealssAP announced it will pay $4.3 billion in cash for cloud-based business commerce solutions provider Ariba, while oracle agreed to acquire Vitrue, which offers a cloud social marketing platform.
IPO filing from Intelsatintelsat filed for an initial public offering of up to $1.75 billion in common stock.
A round-up of the major stories in telecoms in the past month, as reported in our daily news service www.totaltele.com
AT&T eyes India investmentsAt&t has shortlisted four indian start-up companies for technology partnerships and says it may invest in some of them.
Yahoo pulls Livestand plugYahoo announced it will consolidate some of its products this year. the first to go was news-reading app livestand that launched just six months ago.
...and sells Alibaba stakeYahoo agreed to sell up to half its stake of around 40% in China’s Alibaba for $7.1 billion.
Google gets smartgoogle is upgrading its search engine with new data to help it to discover exactly what users are searching for. the upgrade builds on its 2010 purchase of Metaweb technologies.
FCC eyes govt spectrumJulius genachowski, chairman of Us regulator the fCC, called for government-owned spectrum to be licensed for public sector use to address the capacity crunch.
neTWORKs
T-Mo USA signs LTE dealsericsson and nokia siemens networks won three-year contracts to provide lte equipment to t-Mobile UsA.
TIM Brasil brands fibrebrazilian mobile operator tiM will launch its forthcoming fibre broadband service under the brand name ‘live’. it aims to sign up 1 million customers in five years.
June 2012 www.totaltele.com
Smartphone shipments (millions), Western Europe
Total mobile phone shipments in Western Europe grew by 1.3% on-year to 44.8 million in the first quarter of 2012 after three quarters of declines, buoyed by a 37% increase in the number of smartphones shipped, according to IDC; smartphone shipments reached 20.6 million, 63% of the total. Top-end devices, or those priced at €400 and up, accounted for 49% of smartphones shipped, up from 46% a year earlier. Android shipments grew by 124% to 15.5 million units, the OS dominating in the lower tiers and holding its own at the top end, IDC said.
Source: IDC
Vendor 1Q12 Unit 1Q12 Market 1Q11 Unit 1Q11 Market 1Q12/ shipments share shipments share 1Q11 change
samsung 10.9 39% 2.9 14% 273%
apple 7 25% 4.4 21% 59%
Research 2.5 9% 3.5 17% -27% in Motion
nokia 2.3 8% 4.2 20% -45%
Htc 1.6 6% 2.6 12% -40%
Others 3.9 13% 3 16% 30%
total 28.2 100% 20.6 100% 37%
Brazil minister tackles taxesbrazilian communications minister Paulo bernardo called for a reduction in telecoms taxes in the country, which can account for up to 43% of a phone bill.
Competition in IsraelHot telecom and golan telecom launched mobile services in israel, both undercutting the market’s established operators with low-cost price plans.
New US mobile op stoppedVoyager Mobile was set to become the newest Us mobile operator, offering services on sprint nextel’s network, but its launch was halted after an attack on its website. it launched a few days later than planned.
PT Telkom mulls Pacnet bidindonesia’s Pt telkom is conducting due diligence on subsea cable operator Pacnet and will decide in July whether it will submit a bid. Meanwhile, Pacnet announced the abrupt departure of long-serving Ceo bill barney.
China plans $58bn investmentChina will invest more than 370 billion yuan ($58 billion) in its telecoms infrastructure this year, according to a state official.
Thai 3G plan approvedA thai regulatory committee approved a draft framework for the auction of 2.1-gHz spectrum, splitting the available airwaves into nine 5-MHz slots. licences are due to be awarded in Q3.
Clearwire, Qualcomm pactQualcomm agreed to support the td-lte frequency used by Us operator Clearwire on its multi-mode lte chipsets.
BSkyB denies mobile rumoursUK satellite operator bskyb dismissed press reports that
it plans to launch a mobile service. A source close to the situation added that everything everywhere had held talks with sky over the sale of its 1800-MHz spectrum several months ago.
Mozambique newcomerMovitel, majority-owned by Vietnam’s Viettel, became the third mobile operator in Mozambique. it aims to bring mobile services to the masses.
ZTE’s Swedish dealsweden’s Hi3g awarded Zte a $74 million, three-year deal to supply several thousand UMts/lte tdd/lte fdd base stations, plus auxiliary microwave and data transmission equipment.
Canadian mobile wallet dealrogers Communications has brokered a deal with Canadian imperial bank of Commerce (CibC) to enable users to pay for goods with their mobile phones. the firms have yet to announce a launch date.
Argentina gets mobile moneytelefonica and MasterCard teamed up to launch a mobile money service, known as wanda, in Argentina that will be extended to a dozen latin American countries.
Chorus capex plannew Zealand’s Chorus expects capital spending to come in at nZ$560 million-nZ$610 million for fiscal 2013. it says it will have spent nZ$335 million-nZ$355 million in the seven months from its spin off to the end of June.
PeOPLe
Another one bites the dustscott thompson stepped down as Yahoo Ceo just over four months after he was hired as investor third Point won its proxy battle
tiMElinE
Happy BiRtHday ZUcK
facebook founder and Ceo Mark Zuckerberg saw his net worth, on paper at least, rise to more than $20 billion when his company’s shares started trading on the nasdaq last month; it has since settled to a couple of billion below that level, still leaving him among the wealthiest men in the world. Zuck rang the stock exchange bell on 18 May, just four days after his 28th birthday. Microsoft co-founder and once the world’s richest man was reportedly worth a mere $100 million at the same age. the facebook iPo did not go completely according to plan though. technical glitches on the nasdaq left some brokers facing many millions of dollars in losses after the shares debuted. in addition, some analysts are expressing caution over the social media giant’s stock, highlighting concerns relating to its ability to monetise its 900 million-strong monthly user base. At the time of going to press, facebook shares were trading at around $27, below their $38 iPo price. Zuck, meanwhile, is becoming accustomed to married life, having tied the knot with long-time girlfriend Priscilla Chan on 19 May.
to oust him and install its own representatives on the troubled internet company’s board.
Luciani leaves TIM Brasilluca luciani has stepped down from his post as Ceo of tiM brasil. Andrea Mangoni, Cfo at parent company telecom italia, will take on the role on an interim basis.
Jobs go at HPHP said it will cut 27,000 jobs–around 8% of its workforce–over two years in a bid generate annual cost savings of $3 billion-$3.5 billion.
TRAI gets new chairrahul Khullar was named as the new chairman of the telecom regulatory Authority of india (trAi). Khullar, who moves from the post of commerce secretary, succeeds J.s. sharma.
Raja bailedindia’s former telecoms minister Andimuthu raja was finally granted bail after spending 15 months in prison amid the country’s ongoing mobile spectrum allocation scandal. the founders of essar and loop were also bailed.
New RIM execs...research in Motion hired Kristian tear, formerly of sony Mobile Communications, as chief operating officer and frank boulben from lightsquared as its new chief marketing officer.
...and reshuffle aheadthe blackberry maker reportedly plans to announce a major restructuring that will see it eliminate 2,000 jobs.
Job cuts at T-Mobile USAt-Mobile UsA will shed 900 jobs as part of its latest restructuring effort.
4 www.totaltele.com June 2012
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european telecoms operators have long looked to burgeoning over-seas markets for growth, but now
the tide is turning and deep-pocketed investors from emerging economies are quietly increasing their presence in europe, taking on the region’s telcos on their home turf.
the latest move came from America Movil, the Mexican telecoms group backed by billionaire Carlos slim, which late last month made a €8-per-share offer to increase its stake in netherlands-based KPn from 4.8% to up to 28%.
slim is one of a number of cash-rich investors looking to establish themselves in europe. last month isabel José dos santos, daughter of Angolan president José eduardo dos santos, raised her stake in Portugal’s Zon Multimedia to almost 15%; earlier this year Croatian ronny Pecik, working with egypt’s naugib sawiris, increased his holding in telekom Austria to over 20%; and Hong Kong’s li Ka-shing in february bought 100% of orange Austria, but in May had a bid to take over ireland’s eircom rejected.
“with the partial tender offer America Movil’s aim is to acquire an important minority stake in KPn, which has an attractive position in important european markets,” America Movil said in an seC filing.
“[this is] a good investment for Carlos slim to gain more visibility and knowl-edge within KPn’s operations in europe, without having assume any operational control,” says erasmo rojas, director of latin America and Caribbean, 4g Americas. slim has a “track record [of] acquisitions...driven by a good purchase price at the right time,” he adds.
but many see the move as just the start of America Movil’s ambitions.
“we believe the 28% stake could be a first step to try to gain full control of KPn,” says netherlands-based sns securities. “on a standalone basis the valuation of KPn is not particularly attractive in our view. synergies are not significant for America Movil, but the acquisition of KPn as a bridgehead for further european expansion may of course justify a premium.”
whatever their intentions, slim and the other investors looking at europe are moving carefully. european states, even when they don’t hold a direct stake in a telecoms operator, have “a lot of unseen powers” that would enable them to block an unwanted takeover bid, particularly if the buyer would be likely to cut costs by shedding jobs, explains ovum senior analyst emeka obiodu. “these emerging market suitors are treading on eggshells...their approach is incremental,” he says.
indeed, rPr Privatstiftung, an invest-ment vehicle owned by ronny Pecik, started building up its stake in telekom Austria last year and earlier this year telekom Austria confirmed it owned 20.118% of its shares, to the state’s 28.42%. Pecik was elected to the telco’s board in May, but sawiris backed away from a bid to secure a board seat of his own.
similarly, Jadeium–owned by isabel José dos santos–in early May signed a deal to acquire 4.918% of Portuguese cableco Zon Multimedia, upping its holding to 14.918%.
America Movil’s €8 offer for KPn represents a 23.5% premium to the dutch operator’s closing share price when the bid was announced on 7 May, but KPn insists it “substantially undervalues the company”.
but it is these undervalued european telecoms stocks that are key to the current trend. America Movil’s overture to KPn highlights the “undercurrent of vulnera-bility facing european telcos in the post-recession era,” obiodu says; revenue growth has stalled as they face market maturity, competition from over-the-top (ott) players and stringent regulation. “this has attracted cash-rich suitors from emerging markets that are looking for easy pickings among europe’s underval-ued telecoms assets,” he says.
America Movil’s bid to boost its stake in KPN forms part of a wider trend of cash-rich emerging market investors looking to take on Europe. By Mary lennighan
EUROpEan VACATIONE X P A N S I O N S T R A T E G I E S
BUsinEss & financE
European mobile service revenue trends6%
3%
0%
-3%
-6%
-9%
Source: Arthur D. Little, Exane BNP Paribas estimates
Q10
7
Q20
7
Q30
7
Q40
7
Q10
8
Q20
8
Q30
8
Q40
8
Q10
9
Q20
9
Q30
9
Q40
9
Q11
0
Q21
0
Q31
0
Q41
0
Q11
1
Q21
1
Q31
1
Q41
1
n Voice n SMS n Non-SMS data
Fixed-line, broadband and pay TV trends
70
60
50
40
30
20
10
0
Source: Arthur D. Little, Exane BNP Paribas estimates
E/m
onth
per
hou
seho
ld
n Fixed Telephony n Fixed broadband n Pay TV
2009 2010 2011
30.4
21.5
11.7
28.6
22.5
12.0
26.3
23.4
12.7
8 www.totaltele.com June 2012
Pecik, who has dismissed reports that he is keen to build up and sell on his stake in telekom Austria, reportedly described the telco as an “undervalued pearl”.
And where once Hong Kong’s li Ka-shing was looking to sell out of mobile units 3 italia and 3UK, he is now bulking up his european portfolio. in february Hutchison whampoa, via local unit H3g, agreed to acquire 100% of orange Austria in a deal that valued the business at around €1.3 billion. the deal is awaiting regulatory approval. Ka-shing also made a €2 billion bid to take over bankrupt irish incumbent eircom, but was blocked by the telco’s court-appointed examiner.
“Hutchison were not prepared to pony up quite enough money,” says eircom Ceo Paul donovan, adding that should it make a renewed offer, that “will be an issue for the new shareholders” to deal
with. eircom is due to exit examinership on 11 June, at which date its senior lenders will become its shareholders. “in my view eircom needs a strategic investor,” says donovan, adding that it lacks procure-ment scale and the ability to innovate.
lessons to be learnedwhile analysts talk of expansion plans, America Movil itself highlights the move as a learning experience. the company “hopes to explore with KPn areas for potential cooperation, including, but not limited to, roaming, procurement, distri-bution of content and marketing,” it said.
latin America is still growing, but there is no more low-hanging fruit: it is moving towards “emerging maturity”, says obiodu. strategies being employed by telcos in europe “will soon become critical in emerging markets,” he says.
while America Movil’s strength lies in the high-prepaid, low-ArPU markets of latin America, it “also wants to try to learn how to operate in a different envi-ronment and understand what the competitive environment of the mega-operators looks like...without having to take direct control,” adds rojas. it might be looking to “get closer to a region with a more advanced learning curve and better practices on the right business strategies to tackle how to monetise mobile broadband,” he suggests.
european experience is a benefit enjoyed by arch-rival telefonica, which competes with America Movil across latin America.
“telefonica has already been able to export innovative services from europe to latin America, for example cloud serv-ices for the highly strategic enterprise market,” notes daniele tricarico, senior analyst at informa telecoms & Media. “America Movil’s fixed-line arm telmex has struggled to bring innovation to market and could certainly benefit from KPn’s know-how.”
but some believe that the main attrac-tion for America Movil is KPn’s presence in germany, europe’s biggest market and one in which telefonica operates through its local o2 unit. “it’s a chance to go to telefonica’s home region,” says obiodu, suggesting that Carlos slim is looking to give the rival operator a “bloody nose”.
As it stands, KPn is exploring its options regarding german unit e-Plus and its mobile operation in belgium, base; the sale of both could be on the cards, but the success or otherwise of America Movil’s partial tender offer–the accept-ance period runs until late June–would doubtless impact on any such moves.
Meanwhile, european mobile giant Vodafone, which also operates in germany and the netherlands, insists it is not worried by the potential arrival of the latin American powerhouse. “Are we concerned? no,” said Vodafone Ceo Vittorio Colao, speaking at the telco’s full-year results presentation. “Having a good, solid entrepreneur who wants to make money is a good thing to have in a competitor.” n
Investors are weighing in on the debate raging in Europe over incentivising next-genera-tion access deployment. By nick Wood
sinKinG FUNDSN E X T - G E N E R A T I O N I N V E S T M E N T
REGUlatiOn
investors are turning their backs on the european telecom sector, despite high dividend payments, due to the
uncertain regulatory environment, particularly with regard to the deploy-ment of next-generation networks.
representatives from the investment community made it clear at Total Telecom’s regulatory summit, co-hosted with the european telecommunications network operators Association (etno) in brussels last month, that the current regulatory climate does not inspire confidence among those holding the purse strings.
“i’m worried about the present circum-stances in europe,” said stephen Howard, head of global telecoms, media and tech-nology at HsbC. He described the share price performance of european telecom stocks since the market was liberalised in the late 20th century as “abysmal”. “After 13 years of dismal returns, investors have had enough,” he said
And robin bienenstock, senior research analyst at sandford C. bernstein, shared Howard’s concerns. “five-to-six years ago i was getting between 50 and 60 calls per week from investors about which european telecom stocks to buy,” she said. “that volume has since gone down to zero as of April.”
with the industry already “danger-ously over-leveraged”, according to Howard, equity investors rather than lenders represent a more realistic funding
source for next-generation infrastructure projects. However, investors are not convinced of their prospects for generat-ing any kind of meaningful return. “[equity investors] have a moral and fidu-ciary duty to invest wisely. After all it’s your money they’re looking after–your pension–and they have come to the view that fibre, in anticipation of forthcoming
regulations, does not represent an attrac-tive investment.”
the goals of the european Commission’s digital Agenda are basic broadband access for all by 2013, upgraded to at least a 30-Mbps connection for every citizen by 2020. by the same year, half of all house-holds should have access to 100-Mbps broadband.
but there are no guarantees the more ambitious of these targets will be met.
“regulators don’t have a magic wand,” said roberto Viola, secretary general of italian regulator AgCoM, who warned europe is underperforming in terms of penetration of next-generation services.
“the numbers are not looking good for europe,” he said. “fttH (fibre-to-the-home) take-up is 5 million in [the last] seven years, europe’s share of the global cloud computing market is 9%, and when it comes to lte, the Us accounts for 64% of subscribers compared to europe’s 8%.” if europe is to become a leader in high-speed broadband, “stability of the regulatory picture is the most significant asset we need to secure,” Viola said.
As far as fixed-line players are concerned though, there is little clarity in the regu-latory picture.
in october the european Commission’s digital Agenda commissioner neelie Kroes proposed enforced incremental reductions of copper access prices, arguing that telcos have been making
easy profits from legacy infrastructure for too long, and so by lowering the returns on copper the industry will look to deploy fibre for future growth.
etno and the european incumbents it represents argue that the resulting cheaper retail prices for copper-based broadband will limit the price end users are willing to pay for fibre. investors may
also be put off ploughing money into new infrastructure over concerns that future regulation could cap their returns.
“regulating for lower returns on copper sends a dangerous message to investors, which is, ‘once your capital is in the ground it’s fair game’,” warned HsbC’s Howard. “it’s an atrocious message to send to investors.”
investment in next-generation access projects will only happen if those putting up the money are confident they will see a return. “investors are acutely anxious about the asymmetric risk profile of investing in fibre...All the downside lies with the investor, while the upside is capped by the regulator,” Howard said.
“You might as well re-nationalise so you can use your own money and make your own rules,” added bienenstock.
Altnets that rely on wholesale access to incumbents’ infrastructure to provide services claim the prices they pay are draining their cash reserves. european altnet association eCtA recently urged Kroes to make good on her proposals to lower copper access charges and end the “copper gravy train”.
“Altnets are not small players anymore, they’re not starting from scratch,” claimed Pablo Pfost, director of regula-tory and support services at telefonica, who questioned the need for continued asymmetric regulation. “it was decided in the beginning that the one who is regulated is the copper-based player,” and the situation remains unchanged even in markets with facilities-based competition, and where the incumbent can no longer be considered dominant in the retail broadband market, he said.
“it is a bit disappointing to see etno’s position is a not too subtle recommenda-tion for a regulatory holiday,” said Catherine trautmann, Member of the european Parliament (MeP) for france. “regulation is still needed,” she insisted.
However, Howard countered that “offering operators pricing flexibility is
You’d might as well re-nationalise so you can use your own money and make your own rules
not a regulatory holiday”, and concerns that any relaxing of the rules would lead to operators over-charging are unwar-ranted. “regulators: you’ve won,” he said. “Prices in europe are low; any operator that starts over-charging will be ‘rewarded’ with no customers.”
Meanwhile, it has not escaped the attention of regulators that despite revenue pressure in europe, the telecoms industry yields the highest dividends of any sector. in that case, they ask, why can’t operators channel some of those payments into new networks?
dividends are “being pumped back into the financial community; [the money] doesn’t stay in the organisation to be invested in new technology,” said AgCoM’s Viola. “we cannot change the dividend policy of an organisation...but we can give clear signs to the market of stabil-ity and predictability with simple policies.”
but investors would likely balk at the
suggestion of lowering dividends to fund new networks. “Ceos are not free agents, they have to answer to the people who own the company,” Howard said. “it’s hard to conceive of anything more nega-tive to send to investors...the investors that are left in the european telecom sector are there for the dividends.”
with no obvious end to the impasse in sight, where does this leave europe? some argue the continent is on the brink of descending into a broadband backwater. “we might sit on our broadband laurels and watch the rest of the world invent the digital world of the future without us,” warned gabrielle gauthey, eVP at Alcatel-lucent. “believe that the situa-tion is quite serious,” added fernando Zarcos flores, regulatory affairs director at Portugal telecom.
indeed, idAte expects western europe will hold just 5% of the world’s 198.27 million fttH/b subscribers by 2015, compared to a massive 72.78% for Asia-
REGUlatiOn
Pacific and 10.41% for north America.“fibre investments do have a very posi-
tive impact on growth, but we have been discussing for seven years how to regu-late for fibre and the result is no investment,” said wolfgang Kopf, sVP for public and regulatory affairs at deutsche telekom. “if we don’t do anything revolutionary we’ll be discuss-ing this for the next five-to-seven years.”
However, the UK regulator believes it is still too early to assess best practice for fibre. “flexibility at the national level is very important so we can identify the types of remedies that are fair and balanced,” explained lara stoimenova, principal, international policy at ofcom.
if stoimenova is correct, then where is the need for central regulation from the european Commission? “if best practice is different in different markets, then i am really struggling to see the need for central european regulation in the wire-line world,” bienenstock said. n
World Vendor Awards 2012Rewarding the architects of the communications industry
www.worldvendorawards.com
Organised by: Sponsored by:
Best Cloud SolutionVOSS Solutions
Best Content SolutionAlcatel-Lucent -
Best Emerging Market ProductAcision
Best Fixed Access ProductADTRAN
Best Mobile Network ProductSyniverse
Best NewcomerfonYou Telecom
Best Revenue Assurance SolutionLavastorm Analytics -
Best Specialist VendorMomac
Best Support SystemNetCracker Technology -
Best Transport SolutionSyniverse
Green Technology InitiativeZTE
Outstanding Vendor of the YearNetCracker Technology
Technology ForesightEricsson
The Small Cells Award ip.access
Best BrandZTE
Ceo Of The Year Ben Verwaayen, Alcatel-Lucent
The Winners
13June 2012 www.totaltele.com
time is of the essence, particularly for telcos looking to differentiate themselves from the competition
with a good customer experience. At Management world in dublin last
month customer service came under the spotlight from various angles. for many it is all about upgrading back-end systems to provide real-time data, enabling smart-phone users to monitor their consumption as it happens, or operators to be proactive with tailored offers. However, some believe that the roots of a good customer experience lie in the basics: network quality, effective customer care, and clear tariff packages.
“[now] every Ceo i speak to” wants to give real-time information to post-paid
mobile customers, but “a year ago it was not the top priority on their agenda,” says Jaco fourie, senior expert, bss, at ericsson. “it’s driven by the need to manage the customer experience.”
it’s a “tall order” to give post-paid customers real-time information, he says. “nearly all operators that provide smart-phones provide some kind of app,” for the customer to manage data use, but many update every few days, rather than in real-time. “[However], this is a good step in the right direction.”
data roaming is a big growth area for UAe-based mobile operator du, accord-ing to senior marking director Vikram Chadha. “we need to have this informa-tion in real-time, because you don’t want to give your users bill shock,” he says.
“it’s a good time to be in it in a telecom company,” says Vodafone’s group Cio Albert Hitchcock. networks have to be good, but telcos can really differentiate in the customer experience and that’s “driven by it services,” he says.
Some look to complex support systems to deliver a good customer experience, but for others focusing on the basics is the way to go. By Mary lennighan
KEEpinG IT REALM A N A G E M E N T W O R L D 2 0 1 2
cUstOMER ExpERiEncE
Malaysian mobile operator Celcom Axiata aims to enhance the experience of prepaid customers through a recently-completed bss transformation project that saw it migrate its prepaid services to Huawei’s next-generation intelligent network (ngin). real-time notification features mean customers are more aware of their usage and so “they are going to stick with the network,” says Huck siang lim, consulting partner bss/oss at Huawei. “After the launch of the new ngin we see there is a [20%] increase in the daily [prepaid] revenue,” adds badarudin Mansoor, sVP billing serv-ices, at Celcom Axiata.
Zte, meanwhile, launched its Zsmart intelligent charging system at the event,
which converges billing and customer care platforms to improve the customer experience. the system enables operators to offer the right tariff plan to their customers based on their behaviour, explains Zhou Yong, VP of international markets at Zte’s bss/oss business. “the most important thing is that it’s real-time,” he says.
the system, which is already deployed in indonesia and Vietnam, “combines data-crunching techniques and real-time analysis so the service providers can provide the marketing campaign best-suited to the customer at the right time,” says Xiao Zhengcang, technical director at the same Zte unit. that could mean targeting a customer with a prepaid top-up offer, or selling an additional wifi package to a data user, explains Xiao.
the real experience while debates over complex customer experience systems continue, some say it is much simpler than that.
People are confusing customer experi-ence with basic network quality and customer care, says sergio silvestre, CMo at revenue assurance specialist wedo. “why bother with something very advanced if you still haven’t invested enough to solve the basic stuff?” he says. “we need network quality, we need to have excellent people doing customer care.” telcos often outsource customer care, but “it should be your own people, because these are the guys that will go the extra mile,” says silvestre.
72% of telcos believe the call centre is the customer’s preferred method of inter-action when there is a problem, according to a new survey published by Amdocs, but just 30% opted for call centres first, compared with 44% that prefer self-care portals. “there’s a gap between what service providers themselves think about self-service and what end consumers want,” says Alastair Hanlon, VP market strategy, at Amdocs. As telcos find it harder to differentiate themselves, “consumers will increasingly select service providers based on the quality of their customer care,” he warns.
it is a message everything everywhere appears to have taken to heart. the UK mobile operator last month said it will invest £50 million in customer service, across contact centres and high street stores. it is aligning customer service around mobile operating systems.
Meanwhile, some believe that a good customer experience starts with tariff plans. “if you want to get more money out of customers then sell something customers understand and like,” says Karl whitelock, director of oss/bss strategy at frost & sullivan’s stratecast. instead of trying to explain to end users how many Hd movies constitute 2 gb of data, for example, say: “i can offer you four Hd movies and access to a social networking site for $30,” he suggests. “Customers understand that and they will now start using their devices accordingly.” n
Consumers will increasingly select telcos based on the quality of their customer care
World Vendor Awards 2012Rewarding the architects of the communications industry
www.worldvendorawards.com
Organised by: Sponsored by:
Best Cloud SolutionVOSS Solutions
Best Content SolutionAlcatel-Lucent -
Best Emerging Market ProductAcision
Best Fixed Access ProductADTRAN
Best Mobile Network ProductSyniverse
Best NewcomerfonYou Telecom
Best Revenue Assurance SolutionLavastorm Analytics -
Best Specialist VendorMomac
Best Support SystemNetCracker Technology -
Best Transport SolutionSyniverse
Green Technology InitiativeZTE
Outstanding Vendor of the YearNetCracker Technology
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MilliOns taKE taBlEtsGlobal tablet sales will grow to 375 million in 2016, up from 56 million last year, predicts Forrester Research. According to the analyst firm most tablets will be retired from use within three years of purchase; as a result, it forecasts that there will be 760 million tablets in use worldwide by the same date. One third of the total will be purchased by businesses. emerging markets will account for around 40% of sales.
VEndORs KEEp On HiRinGA sample of a dozen of the world’s largest telecoms equipment vendors together had more than 675,000 staff in 2011, up from 629,000 the previous year, and 503,000 in 2007, ovum revealed recently. it says the rise was driven by growth in managed services and the expan-sion of the big Chinese vendors. Huawei, ericsson (which absorbed telcordia), and Zte accounted for much of the 2011 increase, adding 30,000, 14,000 and 10,000 staff respectively. However, Cisco shed 9,000 staff, reducing its workforce by 14%, while nokia (including nokia siemens networks) and Alcatel-lucent each lost 2% of their employees last year.
40 millionglobal LTE subscriptions
this year (ABI Research)
HOt fOR HOtspOtsThe global market for carrier WiFi equipment will grow rapidly to reach $2.1 billion by 2016, fuelled by a growing desire by mobile operators to offload mobile data traffic, according to infonetics Research. Mobile WiFi access points will witness the strongest compound annual growth rate (86%) over that period as mobile operators seek a closer integration of WiFi with the mobile network. ericsson-owned BelAir networks, Cisco and Ruckus Wireless together accounted for more than two thirds of carrier WiFi equipment revenue last year, but infonetics predicts that new players will enter the market in the coming years; the growing demand for WiFi integrated base stations from mobile operators could shift carrier WiFi market share towards the mobile infrastructure vendors, it says.
Source: Infonetics Research
Us MOBilE UsERs spEnd On appstwo thirds of Us mobile application users have spent money on an app on at least one occasion, and of those paying users, the mean spend on apps is $14 per month, according to a survey by Abiresearch. However, the median amount is signifi-cantly lower at $7.50 a month, which shows the highest spenders have a dispropor-tionate role in generating app revenues. indeed, the top 3% of spenders account for almost 20% of the total, while more than 70% spend very little or nothing.
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Source: Forrester Research
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375 million global tablet sales (one-third to
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A majority of tablets will be retired within three years of original purchase
