special edition

Business analysis for telecoms professionals 2013

news & views business technology geography events

A round-up of some Taxing times: Call to arms: View from the top: Dates for your diary and of the major stories Executives ask whether it is The world’s biggest telcos Key quotes from MWC details of the must-attend from Mobile World possible for most mobile urge regulators to allocate 2013 show that telecoms events in the telecoms Congress 2013 operators to turn a profit in spectrum in a manner that operators the world over industry over the coming www.totaltele.com Africa encourages investment face the same challenges months mobile world congress 2013 networks they use. “No!” was the resounding answer from that side of the fence, scene shift although revenue-sharing could be on the cards (p.5). The mobile industry’s biggest event moves to There were new develop- a new home, but the key issues remain the same ments at this year’s MWC, including various smart- t took a little time for need more spectrum and less phone launches, the arrival regular Mobile World regulation (p.9). Interestingly, of the mobile OS, ICongress attendees to get this year there were similar AT&T’s M2M deal with to grips with the new venue complaints from operators General Motors, and the for 2013 (pictured), but once representing Africa with unveiling of Qtel’s new brand the event proper got under some big names expressing Ooredoo. For more on those way it quickly became concern that the continent stories and all the news and apparent that in many ways will follow the same path as debate from MWC 2013 read not much had changed. that taken in Europe in on. Click on the symbols The telco executives that recent years (p.7). when you see them to read took to the stage in the And naturally there was more online. auditorium had a common talk of whether or not Mary Lennighan, editor message, one they had shared over-the-top players should [email protected] before: mobile operators pay their share for the @TelecomEditor

MWC 2013 out with the old 72,000 people descended on Barcelona in February for the new-look Mobile World Congress. Read on for all the news and views from the event

1 www.totaltele.com A round-up of the major stories from Mobile World Congress 2013 as reported in our daily news service www.totaltele.com in brief big news networking i want a new name Verizon Wireless was Qatar’s Qtel has renamed itself Ooredoo in a bid to bring all looking for international its international businesses under a single brand identity. LTE roaming deals at MWC. “From this moment on we are Ooredoo,” chairman The telco also explained how Abdullah Al-Thani announced at Mobile World Congress, its LTE network will keep it explaining that the new name means “I want” in Arabic. ahead of its US rivals. “This name signals our aspiration and commitment to becoming a global force,” Al-Thani added. “This is more than 4G’s no curse just a change of identity for us,” he said, emphasising the SK Telecom reacted angrily telco’s renewed focus on customer experience and involve- to suggestions that it views ment in social responsibility initiatives such as spreading LTE as a “curse” because of education and involving women in the digital world. Indeed, the associated costs. 60% of its rebrand event included presentations from ITU secretary its customers will be on LTE general Hamadoun Toure, barrister Cherie Blair, and by end-2013, it says. Argentine footballer and brand ambassador Lionel Messi. “Welcome to Ooredoo, a brand and a communications Think local company that stands for human growth,” Al-Thani said. Qtel Tailored content will bring will adopt the Ooredoo brand in its home market, as will its mobile users in emerging international subsidiaries, including Indonesia’s Indosat, markets to new devices and Wataniya in Kuwait and Tunisiana. services, according to “[Ooredoo] reflects and conveys our approach to custom- Ooredoo, Bharti, Nokia and ers,” said Al-Thani. “It’s a new name to unite the entire . group.”

Back to school Cable & Wireless Comms shared its views on customer experience, including the This name signals belief that mathematicians our aspiration and often do a better job of commitment to analysing operator data than becoming a global force industry specialists.

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learning curve THE WEB ITSELF IS Huawei revealed it is THE ULTIMATE LEVELLER learning from Apple to make OF THE PLAYING FIELD its Android devices as simple as possible as it announced its newest smartphone, the LTE Cat 4 Ascend P2. newcomer lte-a phone in pipeline OUTFOXING THE ESTABLISHMENT SK Telecom said it is in talks Mozilla CEO Gary Kovacs demonstrated the Firefox smart- with a number of device phone operating system in Barcelona alongside some of the makers over handsets that 18 global mobile operators that have pledged to support it. will run on its LTE- The new open standards-based OS will run on lower-spec Advanced network, due to devices than existing smartphone platforms, meaning it will launch later this year. be a valuable tool in bringing smartphones to a greater proportion of the world’s mobile users. But more than that, it Carrier aggregation near gives mobile operators a greater opportunity to participate in Qualcomm predicted that the smartphone value chain and could break the stranglehold the first deployments of Apple and have on the market at present. LTE-A carrier aggregation An HTML5 device will “enable everyone around the world will come in the second half to participate in mobile,” he said. “The Web itself is the of 2013. ultimate leveller of the playing field.” Firefox will make it easier for users to get access to all ZTE’s new device kinds of content and applications, Kovacs pointed out. It’s not ZTE unveiled the LTE-ca- about having one or two companies approve every piece of pable Grand Memo, but also content: “that’s a broken model and it needs to change.” admitted it has some way to “It’s going to provide a lot of flexibility for the operators,” go to bridge the gap between said Qualcomm CEO Paul Jacobs. “This is going to provide a itself and its tier-one smart- very, very large ecosystem.” phone rivals.

big deals Phone swap Handset refurbishment O2 LTE CONTRaCT eyes on the skies specialist eRC revealed it has Ericsson announced it has won a AT&T brokered a deal with freight saved Sprint $1 billion in less deal to supply 50% of the radio monitoring specialist OnAsset Intel- than four years. access equipment for O2’s UK LTE ligence that will enable it to monitor network and 100% of the evolved in-flight cargo. packet core. Ericsson, SAP tie-up liquid applications Ericsson and SAP brought their 90% Nokia Siemens Networks unveiled respective skills to a partnership of all mobile its new mobile CDN offering Liquid that will see them jointly sell cloud- cells will be Applications and revealed that SK based M2M services to enterprises. small cells by Telecom will evaluate it during the The pair will sell to businesses only 2016 first half of the year. via the operator channel. (Small Cell Forum)

3 www.totaltele.com in brief BIG NEWS

All about automation ARE WE THERE YET? Vodafone explained that it is General Motors will equip the majority of its new vehicles keen to keep human with LTE from 2014, with AT&T providing the network intervention to a minimum connectivity in the US and Canada. when it comes to supporting “No other company is bringing connectivity to this many machine-to-machine (M2M) vehicles,” GM vice chairman Steve Girsky announced at customers. Mobile World Congress. “All of GM’s brands in Europe will be full beneficiaries in the near future,” he added. Grey pounds As well as a connected car-type M2M service that moni- European telcos are missing tors the vehicle and a dashboard information centre, the deal out on revenues from the also covers in-car infotainment services. Girsky talked up the over-55s by not providing potential for in-car infotainment, navigation, and safety appropriate smartphones, services; however, for that potential to be realised, “a broad Fujitsu warned. base of partnerships” is required, he said. GM and AT&T aim to foster an application ecosystem around connected cars. Virtual destiny “People may question the need [for connected car services] Telcos must become part of at first,” Girsky admitted. “But it doesn’t take long for people to the virtual goods market in move from ‘I’ll never need that’, to ‘I can’t live without it’.” order to survive, said KT CEO Suk-Chae Lee, describ- ing it as “our destiny”. people may question the need for connected car services MANAGING PARTNERS EE CEO Olaf Swantee described the difficulties of industry opinion forming industry partner- ships, not least because of the killer clouds “egos involved”. Telcos that want a simple way to win customers and generate revenue from cloud services could do worse than opting to resell an off-the-shelf product Spectrum shortage from a respected software provider. However, Japan’s NEC said this method Mobile operators in Latin comes with a health warning. America are suffering as a “Operators sometimes ask us for killer apps from some big brands... result of regulatory moves We advise them to get some big names, but we also say don’t rely on them to “customise” spectrum too much,” said Manuel Gallo, senior manager of business development for auctions to boost competi- EMEA, at NEC’s cloud competence centre. “You won’t build customer loyalty tion, said 4G Americas. or retention from killer apps like [Microsoft] Office 365 because they’re available everywhere and you will always find yourself challenged on price.” Instead, he advises telcos to create sticky services that become an integral part of their customer’s own business: “I sort of call it forced loyalty.” In its capacity as a carrier cloud services provider, NEC’s brand is 17bn the one thing largely absent from its offering, since it provides solutions annual roaming under white label. “The NEC brand is well-established in the carrier cloud revenues missed [services] market, but we don’t want to undermine the brands of our opera- by mobile tor customers,” said Gallo. “There are sometimes internal concerns that operators our brand is not listed in cloud service rankings, but I always think, would I (Syniverse) rather have the money or the brand? I’ll have the money please.”

4 www.totaltele.com keynote address

COME AND GET IT For the past couple of years over-the-top communications and messaging providers have been considered a threat to mobile operators’ revenues, but at a conference session at Mobile World Congress, one of the big OTT names called for carriers to work with it and take their share of the revenues. 30% of our future revenues are up for grabs by carriers, said Talmon Marco, CEO of OTT messaging specialist Viber. “Come and take it,” he urged the operators. However, there is a caveat: “We’re not making any money today,” Marco said. Those revenues will come if and when Viber is able to charge users for certain services and requires a billing Focused partner. “We’re definitely prepared to share revenues when we charge users because we need someone to process the briefings, key billing,” Marco said. Viber could do that through a partner topics like Google or Mastercard, but it “had might as well be” the companies whose networks it is using, he pointed out. Viber now has more than 175 million users for its services Join us for that run over telecoms operators’ networks and threaten their breakfast in 2013 own revenues. But is it willing to pay for using those net- works? “No!” said Marco. View the event line-up But it is keen to work with the telcos in other ways. “I at www.totaltele.com/ would love to offer our users Viber calls at a high quality,” breakfast Marco said. “Some of our users may be willing to pay for it.” He confirmed that Viber is in talks with a number of telcos and will announce “some pretty cool things” later this year.

we’re definitely prepared to share revenues

In the meantime, it has signed a partnership with Indonesian mobile operator Axis that will let its customers buy a Viber service rather than a full data plan. “We’re helping Axis get its users into the IP world,” Marco said. Telcos need to work with Viber and other OTT players in order to provide the innovative services consumers want, Marco insisted. “If you’re working for a carrier and you want to discuss this further, here’s my email address,” he said, pointing to the contact details in his presentation. Deutsche Telekom CEO Rene Obermann responded immediately. “[We need] more innovation by cooperation,” he said, explaining that Deutsche Telekom is working with a number of OTTs and has invested in as many as 80 such companies. “We’re willing to sit down tomorrow and discuss with you guys,” Obermann said. 5 www.totaltele.com eGov investing in africa taxing times MTN Group, Bharti Airtel ask whether it is possible to turn a profit in Africa against a backdrop of regulatory interference and high taxes

he profitability, or necessary for investment. consolidation,” so that otherwise, of telecoms “This quest for subscribers investments in 2G, 3G and Toperators in Africa was has led to some tactics that fibre networks are paid back, a topic of hot debate at are not sustainable.” he said. Otherwise people Mobile World Congress as a The regulators are also will not invest in Africa. couple of the industry’s playing their part, pushing Operators also face a biggest players shared their down termination rates in a tough tax regime in many concerns over the impact of bid to reduce retail rates for African markets. “The taxes regulatory interference and consumers, for example. “But and the levies are very high,” high taxes. what are you doing to the Kohli complained. He hit out Real mobile penetration industry?” Dabengwa asked. in particular at taxes “by in Africa is still below 50% so “It could be a strategy to different names,” noting that therefore the continent still force some sort of consolida- levies of 8%-10% here and offers strong growth tion,” he speculated. If that’s there can quickly add up to potential, but “there are also the case, “tell us,” he said. almost 45%. “It’s not a cash certain challenges,” such as “One or two are going cow,” he said, suggesting that aggressive price competition bankrupt,” he warned. perhaps telcos are sending and unclear regulatory goals, said Sifiso Dabengwa, CEO of pan-African mobile I’M NOT SURE HOW MANY OPERATORS operator MTN Group. IN AFRICA ARE ACTUALLY PROFITABLE “Whatever we do in Africa we have to avoid what is happening in Europe,” he “Definitely a very small the wrong message to said, referring to regulatory number of African operators governments with flashy intervention and falling are making money,” agreed advertising campaigns. market caps. “[We need to Manoj Kohli, Bharti Airtel’s “Those marketing make sure] we don’t stifle the international CEO and joint campaigns make it look like industry,” like in Europe. managing director. companies are making a lot “I’m not sure how many “Operators are losing of money,” he said. operators in Africa today are money at the [customer] “There is a perception actually profitable,” acquisition stage. It’s wrong,” that telecoms companies are Dabengwa said, noting that he said, also noting that making a lot of money...and some operators in highly there are some smaller that’s where the taxes come competitive markets are countries in Africa with into play,” said Omobola seeking to gain market share populations of under 25 Johnson, Nigeria’s minister by significantly lowering million and up to five of communications. prices. “We have a bit of a operators. “This should However, she rejected claims problem” when some are change,” he said. “Operators that device acquisition costs selling at lower than cost, he and governments should in the continent are high said, profitability being jointly build this agenda of because of taxation. 7 www.totaltele.com “The taxes on devices are not that significant,” she nokia’s €15 phone insisted, claiming that Nokia’s strategy of bringing Windows Phone to consumers on a budget gath- 10%-15% of the cost of a ered further momentum at Mobile World Congress, with the launch of two device is customs duty and new Lumia devices, including its cheapest one to date. When the Lumia 520 VAT. “We don’t think it’s a hits the shelves in Hong Kong and Vietnam in March–followed by the rest of major barrier,” for consum- the world from Q2–it will come with a €139 price tag. ers, she said, adding that the “Today we’re taking innovations like the ones seen in our [flagship] key will be to make sub-$50 Lumia 920 and bringing those capabilities down to lower price points,” said smartphones a reality. chief executive Stephen Elop. “We are starting to build For consumers with slightly more money to spend, Nokia offers the €249 smartphones...to cater to the Lumia 720, which comes with a few more bells and whistles, such as NFC, needs of consumers in wireless charging, and a higher-end camera. It will go on sale first in Hong Africa,” said George Ferreira, Kong, Vietnam and Singapore in March, and then China, India, and other COO of Samsung Africa. markets in Asia, Europe, and Africa from the second quarter. The cost of devices is It is a strategy that puts Nokia more directly in competition with the likes mostly affected by logistics, of Huawei and ZTE, which are using the Android OS to hit as many smart- he said, but “duties on phone price points as they can. Both the Lumia 520 and 720 will also come smartphones into Africa in versions that support China Mobile’s TD-SCDMA network. “It represents a should be reduced or bold step forward in our relationship with China Mobile,” said Elop, who an- eliminated.” Instead, Ferreira nounced Nokia’s first TD-SCDMA-compatible Lumia, the 920T, in December. suggested that governments Elop’s presentation was similar to the one he made at last year’s MWC, should consider taxing when he trumpeted Windows Phone’s arrival into the mid-tier smartphone airtime, since “no bypassing market with the Lumia 610. In 2012 Nokia surprised with the introduction is possible and the consumer of its PureView imaging technology, announcing the PureView 808, a phone will pay for what he uses.” with a 41-megapixel camera. This year, the Finnish handset maker’s party Take-up rose in Ghana when piece was an ultra low-cost device, the Nokia 105. handset duties were re- “2.7 billion people in the world are still without a mobile phone,” said moved, and in Ethiopia when Marko Ahtisaari, EVP of design at Nokia. “This [Nokia 105] is a great phone rates were reduced, he said. for them at just €15.” The 2G-only Nokia 105 has a basic user interface, In the meantime, “we’re is constructed from cheap materials, and does little more than calling and still some distance away texting. It comes with a built-in radio and a flashlight, and has long battery from,” a fully functional life. “You can charge it once a month and still rely on it,” said Ahtisaari. sub-$50 smartphone, he Finally, the Nokia 301 completed the new line-up. Priced at €65 and admitted. “The price will coming in single-SIM and dual-SIM versions, it is a feature phone designed come down between 20% to offer some of the experiences that smartphone owners take for granted, and 25% this year on an such as email, Web browsing on 3G, and storage that is expandable to 32GB. entry-level smartphone,” he Its battery also has a standby life that exceeds one month. predicted, but not to the sub-$50 level. Open source profitability, Nigeria’s aspects need to be managed platforms will also aid the comms minister had a valid better, he said, advising cost issue, but not by enough question for the telcos: “Why regulators and governments to reach that target price. are you still in Africa,” if to look at the industry as a Picking up on the key you’re not making any whole and take into account issue of the day, Ferreira also money? Johnson asked. sustainability. noted that “not all operators “Africa is very profitable,” Europe was very profit- in Africa are profitable, I admitted MTN’s Dabengwa. able at one time, but now would agree with that.” And “There are good profits the businesses are in decline, with all the discussion about being made,” but certain he said. 8 www.totaltele.com mobile spectrum CALL TO ARMS The world’s biggest telecoms operators call on regulatory bodies to allocate spectrum in a way that encourages investment in networks.

t wouldn’t be Mobile emerged. This is not good,” market by reserving World Congress without he said, referring to Google spectrum for them. He also Ithe world’s biggest in the search space, the called on regulatory bodies telecoms executives airing Android and iOS smartphone to stop excessive wholesale their grievances about duopoly, and the likes of and retail regulation. regulatory regimes. At the Facebook and WhatsApp. “We need to continue to opening session Europe’s Telcos pay an “enormous invest,” with the right CEOs were particularly amount in taxes and policies to generate returns vocal, bringing various issues spectrum...[but] others pay on next-generation networks to the table, chief among nothing at all...It’s not and LTE, Colao said. which was the need for sustainable,” Alierta said. Investment was also policy makers to encourage Operators have invested €225 front-of-mind for AT&T investment by allocating billion in Europe in the past CEO Randall Stephenson, spectrum in a fair and five years and yet are who described spectrum as transparent manner. constrained by regulation “the foundation” for mobile “It is critical that we and closed ecosystems. industry development. “It’s acquire additional spectrum, “The UK sent a very clear going to take a whole lot of via an economically-viable message,” he added, referring [capital] over a very long allocation,” said Telecom to February’s auction of period of time,” which Italia CEO Franco Bernabe. 800-MHz and 2.6-GHz requires the right spectrum “The future of mobile spectrum that raised £2.34 and tax policy and light- depends on operators having billion, £1 billion less than touch regulation, he said. timely [access to spectrum]... the government goal. “These He pointed out that in the We clearly require more savings will allow us to US spectrum is sold in wider spectrum [for LTE],” he said. innovate...instead of taking blocks and with a perpetual “The mobile industry is money out of the industry to licence, rather than the still burdened by outdated achieve fiscal growth.” defined-term licences regulation,” Bernabe went Vittorio Colao’s Vodafone granted in many countries. on. “Governments should won spectrum in the UK As a result, “one is inclined avoid imposing excessive auction. Colao criticised to pay more,” he said, and burdens on the industry in moves to “subsidise new also to invest more in the the form of specific taxes,” entrants” to the mobile rollout of networks. and excessive spectrum fees. It was a theme taken up by many of the big names who followed Bernabe on stage. Telefonica CEO Cesar the future of mobile Alierta was keen to share his depends on operators views on the industry’s having timely access inequalities. “Non-regulated to spectrum dominant positions have 9 www.totaltele.com geography: THE MOBILE WORLD VIEW FROM attendees72K at mobile world THE TOP congress Executives in the mobile industry 2013 are facing the same challenges the (GSMA) world over.

SPECTRUM IS THE spectrum FOUNDATION should be FOR ALL OF THIS given to those who are willing to invest We gave otts fertile ground to capture our customer bases

BE SURE THAT AT LEAST YOU GIVE SPECTRUM TO THE ESTABLISHED OPERATORS IN AFRICA WE need to AVOID WHAT’S HAPPENING in europe

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