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Sprint-SoftBank deal okayed by foreign investment watchdogs

Kevin Fitchard — Wed, 29 May 2013 15:46:36 +0000

Sprint revealed on Wednesday that its acquisition by SoftBank had passed a key regulatory hurdle. Normally telecom mergers are the sole purview of the Federal Communications Commission and the U.S. Department of Justice, but since Japan-based SoftBank would effectively take over a U.S. company, the Committee on Foreign Investment in the U.S. also gets its say on the deal’s national security implications.

CFIUS has given its blessing, and Sprint has entered into a national security agreement with the U.S. government. But according to a Wall Street Journal report there are plenty of strings attached. Sprint will create a national-security committee and appoint an independent security director to its board, according to the report. The deal also gives the government the unusual right to veto infrastructure deals and even ban certain vendors outright from Sprint’s network, the Journal said.

The target here is clearly Huawei, which has waged a long political battle with lawmakers and government officials over whether privately-owned Chinese networking giant presents a security risk to U.S. interests. According to the Journal, Sprint would not just be banned from working with Huawei and other Chinese equipment vendors, but it would have to rip out existing Huawei gear in its networks. That would include equipment Sprint’s affiliates installed, but most significantly it would mean a major overhaul for Clearwire if the mobile broadband operator accepts Sprint’s buyout offer on Friday.

Huawei has built a substantial portion of Clearwire’s WiMAX network, which could cost as much as $1 billion to remove. Huawei is also building a portion of Clearwire’s new LTE network, but Clearwire CTO John Saw told FierceWireless last week that the carrier is reducing its dependence on Huawei, and the Chinese vendor accounts for only 5 percent of its LTE spend.

Sprint is encountering problems with the multiple deals it’s juggling. Despite upping its offer to Clearwire shareholders last week, institutional investors are still opposed to the deal. That could make the Friday’s shareholder vote awfully hairy. Sprint is also forced to weigh a takeover counter offer from Dish Network. Despite those distractions, Sprint said today that it expects its deal with SoftBank will become final in July.

For that to happen, Sprint and SoftBank still needs a thumbs up from both the FCC as well as a formal clearance notice from the Justice Department. The DOJ in January raised a red flag about security concerns, but this week’s agreement seems to address all government agencies’ national security questions. There are really no antitrust issues, since Sprint isn’t being acquired by a U.S. telco. Antitrust regulators signed off on the deal in December. The only thing remaining is the FCC’s public interest review.

Correction: A previous version of this post incorrectly stated Sprint-SoftBank is still waiting on antitrust approval. The deal received antitrust clearance last year.

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Home solar leasing business shines for SunPower

Ucilia Wang — Thu, 02 May 2013 23:30:51 +0000

Solar leases have become a popular way for consumers to use solar electricity without paying for the expensive upfront price. Case in point: demand for SunPower’s residential solar leases is far greater than the money available to finance them, company executives said Thursday.

“Our residential lease business remains strong, with demand outstripping our financial capacity in the first quarter,” said Tom Werner, SunPower’s CEO, during a call with analysts to discuss quarterly earnings.

The Silicon Valley company signed over 2,100 leases during the first quarter, bringing the cumulative total to over 16,200. SunPower launched the lease program in 2011. The lease sign up rate is roughly the same as in 2012, during which it signed up 11,415 of them through its network of dealers, or roughly 2,800 of them per quarter.

Homeowners who sign leases, which run 20 years, pay a monthly fee for using the solar electricity from the solar panels installed on their rooftops. They don’t own the equipment and aren’t responsible for its maintenance or repairs. SunPower raises money from investors to finance the leases. The investors, which include banks and companies such as Google, put up the money partly to take advantage of a federal tax credit that amounts to 30 percent of the price of all the solar energy system installed using their funds.

Since the lease business is fairly new, it hasn’t been making a big impact on SunPower’s financial performance though. The company’s shares shot up 17 percent after its earnings announcement mainly because it delivered better financial results than expected.

The company generated $635.4 million in revenue for the first quarter, up 29 percent from the $494.1 million for the first quarter in 2012. It narrowed its losses to $54.7 million , or $0.46 per share, from $74.5 million, or $0.67 per share, year over year.

SunPower makes solar panels and develops power plants. It’s building two huge projects in California. It has installed over 90 percent of the solar panels for the 250MW power plant called California Valley Solar Ranch, which is owned by NRG Solar. It recently started building two projects totaling 579MW that their owner, MidAmerican Solar, called Antelope Valley Solar Projects.

Internationally, SunPower continues to do well in Japan, a hot market that began offering fat incentives for solar energy generation after the Fukushima nuclear power plant disaster in March 2011. Through mostly Toshiba and a little through Sharp, SunPower’s seeing more demand for its solar panels in Japan than it had anticipated, Werner said. Sales volumes doubled from 2011 to 2012 and could double again in 2013, said Howard Wenger, the company’s head of global sales and development.

Most of the company’s solar panels are going to residential rooftops in Japan. Living space tends to be small (and more efficiently used) in Japan than it’s the case in the United States, so SunPower’s highly efficient solar panels are a good fit, its executives said. Its silicon solar panels can convert about 21 percent of the sunlight into electricity, higher than other silicon solar panels on the market today. Silicon solar panels accounted for 89 percent of the solar panels made in 2012, according to GTM Research.

SunPower has had to cut production and costs in the past two years as the global solar market saw a pricing collapse from an oversupply of solar panels.

The average wholesale prices worldwide fell 50 percent from 2011 to 2012 while demand for them grew only 5 percent during 2012, said NPD SolarBuzz. Dozens of solar panel makers around the world have filed for bankruptcy.

SunPower executives said they have beaten their cost-cutting goals.

“It’s brutal to be exclusively a module manufacturer,” Werner said. “As you look at SunPower, we moved from modules originally to systems a few years ago, and what we sell today is energy in the form of leases or PPA (power purchase agreements).”

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Updated: Apple expands iBookstore in Japan with new publisher partnerships

Erica Ogg — Tue, 05 Mar 2013 16:04:05 +0000

A small update to iBooks on Tuesday has some pretty big implications for Apple customers in Japan: with iBooks 3.1 they can now purchase ebooks rather than just download free or public domain content.

The move was foreshadowed earlier this year. Both The Nikkei in Japan and AllThingsD reported in early January that Apple had signed distribution deals with three big Japanese publishers.

In a press release sent out on Tuesday evening Eastern time, Apple notes that the Japanese iBookstore features “titles from major and independent publishers, including a great selection of books from Kodansha, KADOKAWA, Bungeishunju, Gakken and Gentosha. The iBookstore has a wide selection of emerging and established authors including Shyotaro Ikenami, Jiro Akagawa, Atsuko Asano and Ryu Murakami.”

The Japanese iBookstore is also offering enhanced ebooks and “digitally exclusive titles including Ryu Murakami’s fiction novels ‘At the Airport,’ ‘Exodus of Middle-School Students’ and ‘I’ll Always Be With You, Always’ which has interactive emails in each chapter to bring you even deeper into the story.”

The update notes for 3.1 say, “The iBookstore in Japan now has hundreds of thousands of books available for purchase, including fiction, manga, light novels and more.” In addition, the update says there are reading improvements for “a number of Asian languages,” though the specific languages are not specified.

The iBooks update is out now and can be downloaded via the App Store.

This post was updated at 8:17 p.m. ET on Tuesday, March 5 with additional details from Apple’s press release about the iBookstore’s launch.

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Justice Department asks FCC to put Sprint-Softbank on hold

Kevin Fitchard — Tue, 29 Jan 2013 18:05:42 +0000

The U.S. Department of Justice apparently has security concerns about Japanese carrier Softbank’s $20.1 billion bid to take over Sprint, and is asking the Federal Communications Commission for more time to look into the deal.

In a short letter filed with the FCC Tuesday morning, Jennifer Rockoff, attorney advisor for the DOJ’s National Security Division, asked the FCC to defer any action on the deal:

“DOJ, [Department of Homeland Security], and FBI (“the Agencies”) are currently reviewing this matter for any national security, law enforcement, and public safety issues but have not yet completed that effort. We therefore request that the Commission defer action until such time as the Agencies notify the Commission of the completion of their review and, based on the results of such review, request appropriate action by the Commission.

“DOJ, FBI, and DHS will advise the Commission promptly upon completion of our review.”

Update 1: Though the DOJ didn’t go into detail, its review most likely centers on foreign ownership. Softbank would take a 70 percent stake in the country’s third largest mobile carrier, which would automatically trigger a review from federal agencies. It’s important to note that the Justice Department’s antitrust division, which would review from a competitive standpoint, wasn’t even named in the letter.

We reached out to the FCC for a response, but commission spokesman Justin Cole told us the FCC doesn’t comment on pending deals.

Update 2: Sprint responded to our request for comment, saying that this kind of review was expected, and Sprint doesn’t expect it to affect the overall merger timeline. “This is a routine request when working with the [Committee on Foreign Investment in the United States] agencies regarding national security,” Sprint spokesman John Taylor said in an email. “We still expect to close later this year.”

Sprint is facing opposition to its blockbuster deal, but most of it centers on competitive issues. In an FCC filing on Monday, Verizon Wireless didn’t come out against Sprint-Softbank directly, but it had plenty to say about Sprint’s related bid to acquire Clearwire. Verizon said a merged Sprint-Softbank-Clearwire would become the dominant U.S. carrier in terms of spectrum ownerships and wants the FCC to force the company to divest airwaves.

AT&T has not filed any official protests with the FCC opposing the merger, but it has made some rather cryptic statements about Sprint’s spectrum ambitions along with pulling the “foreign company” card. Dish Network has been one of the deal’s biggest opponents publicly and is fighting Sprint for control of Clearwire, but it sent a letter with the FCC to specifically note it won’t officially oppose the Softbank-Sprint deal.

This post was updated at 10:20 AM and again on 11:18 AM on Monday to add comments from the FCC and Sprint as well as background on the Sprint-Softbank deal.

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Why we love the Sprint-Softbank deal: The TV ads

Kevin Fitchard — Fri, 18 Jan 2013 22:15:47 +0000

Who cares about the financial or competitive merits of the Sprint-Softbank merger? We just want the deal to go through so that Softbank can bring its brilliant, yet bizarre, TV advertising to the U.S. No offense, Dan Hesse — we like your commercials, but you’re no Otosan.

For those of you unfamiliar with Softbank’s massively successful advertising campaign in Japan, Otosan is the canine patriarch of the (human) Shirato family, which also includes Japanese wife Masako, Japanese daughter Aya and African-American son Kojiro. Trust me, it gets even weirder.

Here’s a typical Softbank commercial in which Otosan attends his high-school reunion:

And here’s another, advertising the iPhone:

Despite the success of the Shirato campaign, Softbank has branched out into other equally bizarre but compelling advertising themes. It’s hired Brad Pitt (who can afford Brad Pitt?) as well as film auteurs Wes Anderson, Spike Jonze and Wong Kar-wai to do a series of brand promotion commercials.

Here’s Wes Anderson’s collaboration with Pitt:

And here’s Spike Jonze’s contribution:

But it all comes back to Otosan. Here’s a fun experiment. Try watching this popular ad featuring the Shirato family and Tommy Lee Jones without the subtitles.

Confused? Now try watching with the subtitles. It makes even less sense (unless you happen to be familiar with Jones’ work as a spokesman for Japanese coffee brand Suntory Boss).

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Gawker expands into India as part of Nick Denton’s plan for world domination

Mathew Ingram — Tue, 08 Jan 2013 18:32:13 +0000

Gawker Media is starting the new year off with a bang: founder Nick Denton announced on Tuesday that the blog network is expanding into India by way of a partnership with the Times of India, one of that country’s largest media entities. The online unit of the Times will be responsible for managing and marketing the local versions of Gizmodo and Lifehacker, and will also be creating unique content for them, according to an IM conversation I had with Denton on Tuesday morning.

The Indian sites will join Gawker’s new Spanish-language version of Gizmodo — which launched on Monday — as well as local versions of various Gawker sites that have launched in Brazil, Hungary and the United Kingdom. In some cases, as with India, the local sites are run by partners in that country, and consist of translated blog posts from the U.S. site as well as some local content created by those partners.

Gawker’s partner in Brazil — a media entity called F451 — runs native versions of four Gawker sites (Gizmodo, Kotaku, Jezebel and Jalopnik) while the company’s partner in Japan runs just a local version of Gizmodo. And in Hungary, the Gawker presence consists of a site called Cink.hu, which isn’t really a copy of any of the blog network’s other sites and is run by Laszlo Szily, who worked for Denton when the Gawker founder was a Financial Times correspondent in Hungary.

Gizmodo’s new Spanish site and the Hungarian site are new variations on the model because they aren’t based on partnerships with local operators like the Times of India — they are both owned and operated by the U.S. company, using staff who write in the other language (although both will also run translated versions of Gawker content). Some of the staff at Gizmodo’s new Spanish version are based in New York and others in Spain, a result of Gawker’s recent acquisition of a local Gawker-style site called Guanabee, whose founder now runs Gizmodo en Espanol.

Gawker wants international to be 20 percent of revenue

I asked Denton whether the company is expanding internationally because growth in the U.S. market has slowed and he said no — according to the Gawker CEO, the blog network says it expects to see 40-per-cent growth in 2013, an even faster rate than it saw in 2012, although Denton didn’t say whether that was revenue or some other metric (Update: Denton clarified to me via Twitter that he meant revenues). He also said he wants to take international revenues to 20 percent of Gawker’s sales from the 5-per-cent level they are at currently, and that international deals are much more lucrative for Gawker because the profit margins are higher,.

As for what comes next, Denton said China is the biggest hole in Gawker Media’s portfolio of international properties. The company has been trying to set something up there but hasn’t been able to find the right local partner yet, he said, and therefore it may need to publish Chinese content from somewhere outside the country if it wants to make inroads into that market.

Denton also said that the company’s new Kinja platform has been a big part of the expansion, since it allows Gawker sites to host more active conversations and discussions than the previous version — including discussions that are sponsored by advertisers. Gawker launched the new platform last year, and Denton told me in an interview at the time that the focus on discussions awas going to be a big part of the future of Gawker.

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Apple will sell ebooks in Japan

Laura Hazard Owen — Wed, 02 Jan 2013 14:00:53 +0000

Apple will launch a fully fledged iBookstore in Japan this year, Japanese newspaper The Nikkei reports [paywall, only a snippet is free]. While iBooks has been available there since 2010, Apple and other e-reading companies faced reluctant publishers. Now, with Kindle , Kobo, Google and Sony all selling ebooks in Japan, Apple reportedly has agreements with Japanese publishers Shogakukan, Kodansha and Kadokawa.

The timing of the launch is unclear. While The Nikkei says it could happen as early as this month, AllThingsD cites sources who say that’s “far too optimistic.”

Japan has been slow to embrace ebooks, with manga dominating the ebook market and publishers reluctant to digitize books in fear of cannibalization of print sales. (Publishing Perspectives has a lot of good coverage of the ebook transition in Japan.) But the arrival of other Western ebook retailers in the country should grease the wheels for Apple, and since the iPad’s market share in Japan is estimated around 60 percent, that should also help adoption of the platform.

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Boingo’s global footprint expands with 55,000 Japanese hotspots

Kevin Fitchard — Wed, 12 Dec 2012 19:44:15 +0000

Boingo customers with a yen to travel to Japan will now find plenty of wireless broadband available to their smartphones, tablets and laptops. The Wi-Fi aggregator on Wednesday announced a deal with NTT DoCoMo which not only gives it a huge new presence in Japan, but also increases its global hotspot count by 10 percent.

In two separate but reciprocal agreements, DoCoMo’s network of 55,000 hotspots will all become virtual nodes in Boingo’s Wi-Fi network. Before the deal, Boingo customers had access to only 5,000 hotspots in Japan. In turn, NTT DoCoMo customers will be able to roam onto Boingo’s global network, which now boasts 600,000 hotspots.

Boingo’s presence has expanded considerably in the last two years. It has announced similar roaming and offload deals with Korean carriers KT and LG U+ which together host 67,000 access points.

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LTE accounts for 7% of all North American mobile connections

Kevin Fitchard — Fri, 30 Nov 2012 21:28:50 +0000

In just two years LTE has come a long way. At the end of the third quarter there were 21.5 million LTE connections in the U.S. and Canada, accounting for 7 percent of all North American mobile subscriptions, according to new data from Wireless Intelligence, the research arm of the GSM Association.

In fact, nearly half (48 percent) of all global LTE devices reside on one of the U.S. or Canada’s 15 live LTE networks. Europe has been much slower to adopt the new 4G technology, while LTE activity in Asia has been confined primarily to South Korea and Japan.

The U.S. accounts for 20.5 million of those 4G subscribers, while Canada’s networks host about 1 million. And of those U.S. subscribers, three-quarters or 14.9 million reside with Verizon Wireless. Verizon was not only the first major global operator to launch LTE, it has rolled its network out surprisingly fast. It now offers 4G in well over 400 markets.

LTE image courtesy of Shutterstock user Inq

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Infinera tests 8 Tbps speeds on older fiber

Stacey Higginbotham — Wed, 28 Nov 2012 15:36:38 +0000

Infinera and Nissho Electronics are showing off lab tests that can deliver 8 terabits per second of capacity over 800 kilometers. This level of capacity is about half the lit capacity delivered under the Atlantic. Essential to this test was that it could deliver this high-capacity over fiber that previously was unable to handle such fast (and fat) connections.

The test used Infinera’s technology across 800 kilometers of a special type of fiber called Dispersion Shifted Fiber. This DSF Fiber is used in Japan, but currently can’t handle some of the advanced techniques companies are using to add more capacity to existing fiber. From the release for those who like the technical bits:

DSF fiber, deployed throughout Japan, has proven to be a challenge in deploying high-capacity dense wavelength division multiplexing (WDM) transport technology due to low chromatic dispersion in the C-Band, making it difficult to achieve high capacity optical transmission over long distance economically. As a result, capacities have been severely limited and have had to utilize expensive L-band technology to achieve long haul quality performance from the DSF fiber.

When using the same Infinera gear over modern fiber strands, the equipment can deliver 8 Tbps over distances of 2,500 kilometers, showing that even certain types of fiber aren’t as future proof as we might think, given our insatiable demand for bandwidth.

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