This is a big win for Spain-based Telefónica, which is trying to get as many partners as possible to plug into its BlueVia billing API. It’s previously managed to get Google, Facebook, Microsoft and BlackBerry to agree to play along, but Samsung is the first major phone manufacturer to sign up. It also happens to be the world’s top phone manufacturer, having shipped 70 million smartphones in the first quarter of this year.

Carrier billing makes it easier to sell smartphones to people, particularly in emerging markets, who lack a bank card. Telefónica has 315 million mobile customers around the world, and is particularly strong in Latin America. The fact that Google Play is already plugged into Telefónica’s billing API means that, without this deal, Samsung was risking its cardless Android customers finding it easier to buy through Google’s storefront than Samsung’s.

As Lee Epting, vice president of Samsung’s Media Solutions Centre Europe, said in a statement:

“Samsung is committed to ensuring that our customers have choice and convenience when purchasing content on our devices. Our partnership with Telefónica Digital allows us to deliver yet another easy and convenient purchasing experience to our Samsung Hub and Samsung Apps customers.”

The “direct-to-bill” option will roll out first to Telefónica’s O2 business in Germany, during the coming months, then to its other operating businesses in a phased deployment.

We’re going to be seeing more of these carrier billing arrangements in the future, and that’s a good thing for all concerned. Not only does it mean more apps and content will be sold, benefiting their producers, but it also means the telcos themselves aren’t shut out of the value chain.

And, if the carriers manage to be involved beyond the provision of basic data services, it may stop them complaining about returns on their network investments and trying to do heinous, net-neutrality-shredding things like charging content providers for their traffic. Everyone’s a winner.

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The short answer is no. The Sunday Times (paywall alert) may have billed its story as being about the potential sale of 27 million people’s details to the cops, but the reality is somewhat less alarming. As Ipsos Mori has been forced to explain in response to the exposé:

“In conducting this research we only receive anonymized data without any personally identifiable information… We do not have access to any names, personal address information, nor postcodes or phone numbers. We can see the volume of people who have visited a website domain, but we cannot see the detail of individual visits, nor what information is entered on that domain. We only ever report on aggregated groups of 50 or more customers. We will never release any data that in any way allows an individual to be identified.”

So what does this data tell us? According to the original article, it provides insights based on “gender, age, postcode, websites visited, time of day text is sent [and] location of customer when call is made”.

Reverse engineering

Now, as we discussed recently, it is easier than you might think to de-anonymize data due to the uniqueness of our personal movement patterns — as long as you have the will, the datasets and the pieces of identifying information that can be correlated with the anonymized individuals effectively described in those datasets. So those horrified reactions to the weekend’s revelations are not entirely groundless. They are over-the-top, though.

There is a significant difference between a register of communications (who contacted whom and when) and a pool of anonymized data where the most fine-grained nugget of information that might be reverse-engineered would tell you that Person X visited the Gmail domain while within a 100 meter radius of the corner of Oxford Street and Tottenham Court Road. To assume equivalence between the two ideas is to ignore the elements of intent, will, data-crunching capacity and, frankly, competence. In short, there are far easier ways for the police to track individuals through their handsets, such as just going to the carrier and demanding to do so.

(The Sunday Times said sources claimed “officers had been enthusiastic about the potential for tracking users of pay-as-you-go phones,” but – quality of sources notwithstanding — I suspect those officers may have been slightly overestimating their own data-crunching powers. They may have also overlooked the fact that the operators would have no idea of their pay-as-you-go users’ age or gender, making it near-impossible to tease out an individual from the anonymized mass. Either way, they backed off once the story broke.)

Not damning

And then there’s the matter of this data’s innocent utility. Of all the sources of “big data” that is both largely untapped and genuinely useful, mobile operators must be among the most potentially fruitful. In societies where everyone is carrying a phone, there can be no better way to establish the density and fluidity of traffic flows and footfall. This data is gold dust, not just for retailers, but also for town planners and councils. It shows us how our cities and roads really work, and it can help us make them more efficient and pleasant to live in or use.

I feel a bit sorry for EE in this particular case. After all, its rivals Telefonica (trading as O2) and Vodafone are also offering up their customer data for analytics purposes – Telefonica’s “Dynamic Insights” program is being carried out in partnership with market research firm GfK, while Voda launched its mobile analytics play just last Friday.

“Everyone is doing it” would be a lousy apology in itself, but I don’t think any of these carriers or their partners are doing anything wrong, as long as their datasets are suitably anonymized. If people could feasibly be personally identified from this data, the carriers and their market research partners would instantly find themselves on the wrong side of existing data protection legislation — the fines in the UK for this stuff are pretty paltry, but they would also quickly lose the trust of their customers, so there’s little motivation for the telcos and their partners to cross the line.

It’s great that people are concerned and watchful about their privacy, and long may they continue to be. However, this is a case where the potential benefits of the data are both great and realistically attainable, and where the downsides are so unfeasible as to be worth discounting, at least at this stage. It’s now up to the carriers to explain this to their customers in understandable and honest terms.

There will be great battles worth fighting in the war over our personal data and its exploitation. This ain’t one of them.

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VMware was already an investor along with Kernel Capital and Enterprise Ireland, and all three have participated in the new round as well. Intel has however taken the lead this time with ACT Venture Capital also joining in.

FeedHenry serves business customers that want to develop and deploy in-house mobile apps. In February the company partnered up with Telefonica, allowing the bundling of FeedHenry’s platform with the telco’s infrastructure-as-a-service platform, Instant Servers, for the benefit of European customers.

According to Marcos Battisti, Intel Capital’s managing director for Western Europe and Israel, the investment will help FeedHenry expand internationally:

“The mobile application market segment for enterprise is at a tipping point and those companies delivering a comprehensive solution that provide both an end to end mobile development strategy and a way to implement applications easily and securely will be at the forefront of the market segment.”

FeedHenry’s rivals include firms such as Antenna Software and SAP. The Irish firm’s particular selling point is flexibility, allowing deployment of its Mobile Application Platform to public, private and hybrid clouds. Apps developed on the platform can also be built once then rolled out to iOS, Android, BlackBerry and Windows Phone devices.

The company also provides “backend-as-a-service” functionality, with server-side code based on Node.js, as well as app management tools and analytics. There’s been considerable activity in that BaaS market with Salesforce.com and Rackspace adding mobile backend capabilities there and Facebook buying Parse just last week.

It should be noted that this is far from the first investment Intel Capital has made in this space. Just this January, it also put $4.6 million into enterprise mobile app deployment firm Apperian. And, in February, parent company Intel bought the mobile app development tools division of AppMobi.

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The 12-person San Francisco startup, headed by CEO Tim Tuttle, already had $2.4 million in hand from investors like Google, Greylock Partners, Bessemer Ventures and others. Tuttle refused to give the total value of the trio’s new investment except to say it exceeds all previous funding.

The backing of leading companies from the consumer device, semiconductors and telecommunications worlds is a significant endorsement of the company’s vision.

“We’re still a small company, but we have the backers and team to make a serious run at solving a very hard problem,” Tuttle said in a phone interview. “Which is, how do we get computing devices and applications to understand everything we say and find stuff before we need to search for it?”

That vision — which is shared with others working in predictive computing — is that our computers should push information to us, instead of us having to constantly ask. Expect Labs’ videoconferencing iPad app, MindMeld, is a basic example of what it’s working on: as a conversation is taking place, the contents of it are being analyzed and relevant information pops up in response to what’s being said.

Expect Labs’ three new investors seem to be positioning themselves for the future of computing that’s defined by natural interfaces: touch, gesture and voice. Samsung is one of the biggest consumer electronics makers in the world and will probably want to be able to offer natural interfaces with its TV and mobile devices one day; Intel makes sensors that will pick up inputs like voice; and Telefonica could theoretically use something like what Expect Labs is offering and turn computers listening to phone calls into an additional service for individuals and businesses.

Expect Labs’ partnership deal with Nuance Communications, signed last year, will continue, Tuttle said.

With the fresh round of capital, Tuttle says he plans to grow his team with experts in machine learning and language analysis, and scale up the company’s current infrastructure.

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We now know this for a fact, courtesy of analysts at Informa. As Europe’s digital chief, Neelie Kroes, greeted the news on Monday morning:

It's official: chat apps have overtaken SMS globally. The cash cow is dying. Time for telcos to wake up & smell the data coffee.—
Neelie Kroes (@NeelieKroesEU) April 29, 2013

Informa says 2012 saw nearly 19 billion messages sent over these apps each day around the world, versus 17.6 billion SMS messages. The analyst house reckons the contrast will be even starker in 2014, with 21 billion text messages projected, against almost 50 billion app-based messages.

As you will note, this suggests that SMS volumes will continue to increase, at least in the short term. Nonetheless, it is clear that the big growth is to be found in, er, the data coffee – spurred along by the likes of Nokia, which is now selling phones with dedicated WhatsApp keys.

However, things may not be as bleak for the mobile operators as they seem.

Hazy picture

First off, while the volumes of non-SMS messages has overtaken that of traditional texts, the user numbers remain significantly lower – although how much lower is a bit unclear.

According to Informa analyst Pamela Clark-Dickson, there were 3.5 billion SMS users in 2012. Regarding the chat apps, Clark-Dickson only took 6 into account, namely WhatsApp, BlackBerry Messenger, Viber, Nimbuzz, Apple’s iMessage and KakaoTalk. At the end of 2012, she said, there were 586.3 million users of these platforms, but that’s not taking into account other giants such as Facebook Messenger for Android (somewhere between 100-500 million installations) and China’s TenCent (around 300 million users).

Even if there were, let’s say, a billion chat app users, the disparity between message volume and user numbers shows that people who use these “over-the-top” (OTT) apps use them more frequently than those who use SMS – specifically, the average OTT app user sends 32.6 messages a day, and the average SMS user just 5 texts. This stands to reason because OTT apps are generally free to use, so we should therefore be wary of assuming that every OTT message represents a “lost” SMS from a revenue perspective, in much the same way as it’s illogical to claim that a free “pirated” song download represents a lost sale.

Those chat app users are probably also SMS users, because – for example – WhatsApp is of little use when you’re trying to message someone on a different platform (or someone with a basic dumbphone). There, SMS is and remains the great leveller: any mobile phone can use it. This is particularly important for some enterprises.

Whither Joyn?

And then we have a big unanswered question: even when SMS tails off, how big a chunk of the IP-based messaging market will the carriers themselves own?

Thing is, Informa’s analysis of the market does not include projections for Joyn, the industry-wide drive to create a common, interoperable messaging and file-sharing platform that works on all (or at least most) operators’ devices — Joyn has only just kicked off, so there are no real takeup figures from which to extrapolate. Precedent suggests that the mobile industry is incapable of acting in concert, but that doesn’t mean it can’t buck the trend when its back is against the wall.

“Mobile operators do have the opportunity to provide their own IP-based messaging applications,” Clark-Dickson noted.

And then we have services such as Telefonica’s Tu Go and Rogers’s One Number that extend traditional handset functionality onto the desktop. These services heavily blur the line between SMS and IP-based messaging – if the carriers can pull off this sort of thing while monetizing it in some way, what does it matter whether the medium used is technically SMS or something else?

Also don’t forget that carriers can build offerings around these third-party apps. For example, WhatsApp has partners with 3 Hong Kong and RCom, which sell flat-rate bundles specifically for WhatsApp use while at home or roaming. It may break the principle of net neutrality, but it’s a tactic some carriers are employing.

Either way, though, what’s clear is the speed at which all this is happening. The SMS is 20 years old and chat apps have only been around for around 5 years. Although we should take care when predicting the results, the trend of IP-based messaging replacing SMS certainly appears unstoppable.

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The carriers hate OTT apps because – they claim – they don’t make any money off them. This is nonsense, of course: when they’re not being blocked or throttled by the operators, the use of these apps drives the sales of new devices, and of the data services themselves. The real reason carriers hate them is because they’re often better rivals to the carriers’ own legacy services, including voice (Skype, for example) and SMS (WhatsApp).

And so the carriers have been experimenting with services that act as direct rivals to the likes of Skype and WhatsApp: Orange has Libon, T-Mobile USA has Bobsled and Telefonica has Tu Me. The problem is, these apps all just do what their third-party rivals do. For the carriers that are putting them out, they act as little more than brand ambassadors. They don’t actually create much value for the carriers’ existing customers, nor are their new platforms innovative enough to lure users from third-party rivals.

Until now. Someone has finally got the point. The carrier in question is Telefonica again, and the app – now available for O2 UK contract customers only – is called Tu Go. The proposition is very simple. Using the Tu Go app on Android, iOS or the PC, subscribers can make and receive calls and texts over Wi-Fi using their normal mobile number. The calls and texts come out of their standard allowances.

But surely it’s better to use a new-generation platform, I hear you say. Not always. For example, I work from home and I call people using Skype an awful lot, largely because the mobile coverage in my apartment is dreadful. Skype’s cheaper than mobile in most cases, but it doesn’t show the recipient of my calls the phone number printed on my business cards. Also, it means having multiple billing accounts. With a service like Tu Go, problem solved.

This isn’t trying to create yet another platform. All it’s doing is using the power of the app to bring legacy functionality into the modern age; to make it more useful. Telefonica has realized that you don’t fight the upstart by creating a separate platform to your core product: you adapt and extend your core product instead.

Will it be enough to fend off the upstarts? For some users, it will; for those who gave up on their mobile operator a while back, it won’t. But it’s the first OTT app I’ve seen from a carrier that doesn’t feel like they’re flailing around in response to their IP-only rivals. Having covered this stuff for a while, I could weep with joy.

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The deal, which is subject to regulatory clearance, should close in April. If that goes ahead, the customers will be moved off the O2 and BE Broadband brands and become Sky customers. Sky (40 percent of which is owned by Rupert Murdoch’s News Corp) would then become the UK’s second-largest ISP, behind BT and ahead of Virgin Media.

Telefónica will get £180 million for its broadband business, plus an extra amount — up to £20 million — upon the “successful delivery and completion of the customer migration process”.

Here’s what Sky CEO Jeremy Darroch had to say:

“Sky has been the UK’s fastest-growing broadband and telephony provider since we entered the market six years ago. From a standing start in 2006, we have added more than 4.2 million broadband customers. The acquisition of Telefónica UK’s consumer broadband and fixed-line telephony business will help us accelerate this growth.

“We believe that the O2 and BE consumer broadband and telephony business is a great fit, with customers used to high-quality products and strong levels of customer service. We look forward to welcoming these new customers to Sky and giving them access to our wide range of high-quality products, great value and industry-leading customer service.”

This deal is not hugely surprising, in that O2/BE has a shrinking customer base (as ISP Review notes, that base peaked at 671,000 customers and currently sits at around 560,000). However, it may prove to represent more than consolidation in the UK’s fixed-line market.

European mobile carriers are itching to carry out more mergers, particularly in highly competitive markets. The UK is about as competitive as it gets. With Deutsche Telekom and France Telecom having already merged their UK operations (formerly T-Mobile and Orange) into EE, I would now frankly be surprised if we didn’t see the newly mobile-only O2 UK merge with one of the others. Based on the complementary nature of their recent 4G spectrum wins, Vodafone would be a good fit.

This is shaping up to be a very exciting year in the UK communications market.

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Raco is one of the players supplying the backend connectivity for the internet of things, linking everything from agricultural harvesters to ice machines to the cellular networks. While it’s worked exclusively with T-Mobile in the past, the deals expand its scope both to CDMA technologies and Telefónica’s extensive networks across Europe and Latin America.

According to Raco President John Horn, the two new deals, combined with a similar tie-up with U.K. operator Everything Everywhere, allow Raco to go after the internet of things on an international scale. For instance, Raco could now serve shipping companies wanting to track their vehicles or containers as they cross borders, or appliance makers that want to avoid signing connectivity deals with a separate carrier in every new country.

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The auction took in 250MHz of spectrum in the 2.6GHz band, which is high-bandwidth and good for urban deployments, and the 800MHz band, which is lower-bandwidth but longer-distance and better for rural deployments. EE (which already runs 4G on reused 2G spectrum) and Vodafone both won spectrum in both bands, while Three and O2 (Telefonica) each won spectrum in the 800MHz band. Niche Spectrum Ventures (a BT subsidiary) won 2.6GHz spectrum.

The reserve price for the auction was £1.3 billion, although the government had budgeted for it to bring in £3.5 billion. Does that make the result disappointing? That depends on whether you see the government forecast as politically motivated or focused on the actual worth of the spectrum. There was never much justification given for the £3.5 billion figure, and no-one appears to be taking responsibility for it — today the Treasury told me to take my questions about the figure’s rationale to the Department for Culture, Media and Sport (DCMS), and the DCMS told me to ask the Treasury.

According to the regulator Ofcom, new services should roll out in about six months’ time, and the whole of the UK will be able to receive 4G services “by the end of 2017 at the latest”. This will partly be helped by an obligation placed on Telefonica’s O2 to ensure coverage for at least 98 percent of the UK population through its own network alone.

Ofcom chief executive Ed Richards said this would be good news for parts of the country where mobile broadband is currently scarce:

“This is a positive outcome for competition in the UK, which will lead to faster and more widespread mobile broadband, and substantial benefits for consumers and businesses across the country. We are confident that the UK will be among the most competitive markets in the world for 4G services.”

Here’s who won what:

It’s worth remembering that this represents BT’s return to mobile network operator status, after spinning out BT Cellnet (now O2) in 2002. However, as expected, the operator will not be building a national network like the others. According to a statement, the spectrum will let BT “provide its business and consumer customers with an enhanced range of mobile broadband services, building on its existing strength in Wi-Fi”.

This story was updated several times throughout the day as additional information became available.

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Essentially, Telefonica will start selling FeedHenry’s platform to its European enterprise customers with Instant Servers providing the hosting piece. Technologically, the two platforms are fairly well aligned — FeedHenry uses Node.js for integration with its back-end systems, and the Joyent-based Instant Servers platform uses Node.js SmartMachine virtual machines. Predictably, the two companies talk in their statement about “sharing a vision for cloud computing”.

“We are seeing increased demand from enterprises seeking cloud-based mobile app platforms to reduce up-front costs and time to market,” FeedHenry CEO Cathal McGloin said in a statement. “Corporate IT and app development teams will now be able to build applications for the most demanding consumer and enterprise users to quickly and easily deploy them securely to the cloud.”

FeedHenry, which was a finalist in GigaOM’s Mobilize Launchpad contest back in 2010, is based in Ireland, although it recently opened an office in England as its European business expands. Spain’s Telefonica is increasingly trying to push into the cloud, as are most large operators.

“The intersection of mobile and cloud is a natural one,” Telefonica Digital Cloud Director Tim Marsden said in the statement. “Our goal is to accelerate the availability of mobile-optimized, cloud-based services for app development and management, giving full access to cloud services like storage, security, caching, and server-side business logic.”

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