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Where new opportunity lies in the mobile operating system space

Wed, 22 May 2013 06:55:09 +0000

Roughly half a dozen new mobile operating systems will come to market over the next 6 to 12 months. Many of these look to be more sophisticated than the older ones controlled by Apple and Google. This report will examine the most noteworthy of these new operating systems, Blackberry 10, Firefox, Tizen, and others. It will also document their competitive advantages and disadvantages and gauge what their chances of success — or even true disruption — might be.

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So UK carriers are selling anonymized customer data? That may not be a bad thing.

David Meyer — Mon, 13 May 2013 16:09:20 +0000

The news that British 4G carrier EE is trying to sell anonymized user data, in league with market research firm Ipsos Mori, has been greeted with wrinkle-nosed outrage — particularly the part about the Metropolitan Police being a potential customer. After all, the UK has just (mostly) dodged proposed legislation that would have led to monolithic registers of citizens’ online communications. This is just a privatized version of the same thing, right?

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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Vodafone investors want more money in still-speculative Verizon takeover deal

Stacey Higginbotham — Mon, 29 Apr 2013 14:09:01 +0000

Verizon hasn’t put an offer on the table, but that hasn’t stopped some of Vodafone’s biggest investors from saying a $100 billion takeover price is too small. They want $120 billion, gosh darn it!

According to a Reuters story this weekend, six institutional investors have protested the $100 billion price tag that Reuters floated last Wednesday. Both of these numbers followed a wack-a-doo rumor from early April that AT&T and Verizon would jointly team up to buy out Vodafone’s 45 percent stake in Verzion in a deal valued at $245 billion. That rumor was reported by the Financial Times’ Alphaville blog. And Verizon denied it.

For those watching at home, it’s possible that you think the media has lost its ever-loving mind, or that somewhere a bored investment banker is sitting back in his ergonomic chair, fingering his Ferragamo tie and cackling with glee. But in general, when these sorts of rumors start hitting the press, it’s part of an aggressive campaign of leaks, where a company (or bank) can float some rumors in hopes of sparking a deal.

Reuters reporters aren’t getting phone calls from Verizon’s board members (although it has happened!); I think they are getting calls from bankers who want to make a deal happen. And it’s a crazy deal with crazy regulatory and possibly tax burdens, but it’s also the right sort of crazy. Verizon and Vodafone’s shared stake in Verizon Wireless has irked both companies for years.

Vodafone needs cash for investments in growing markets and Verizon has been stingy with its dividends. But, as the latest Verizon dividend payment shows, if investors can get Verizon to part with the dollars, Vodafone rewards its shareholders with cash. Meanwhile, Verizon would love to own its network outright if Vodafone would just sell back that stake. But so far Vodafone won’t. Thus, the leaks.

Of course, the two companies have broached the subject of a merger, much like unhappy spouses broach the topic of divorce. But the logistics of the deal — Verizon probably doesn’t want to pay what Vodafone thinks the stake is worth, and each side has shareholders who are, like children, unhappy with a split — have made it too much to think about.

Hence the posturing via blogs and wire services. This is a way of testing the shareholders and perhaps regulators to get a feel for what the deal might entail. This may not come from the companies as a serious play, but rather from bankers who see the fees associated with the deal and understand the lay of the land at both companies. If they can warm up the companies via the media, then they might get a chance at a pretty lucrative deal. That is what bankers get paid to do.

So grab your popcorn, and sit back to enjoy the negotiations between Verizon, Vodafone and whatever financial institution or institutions are selling this sideshow. I suppose it beats wondering how carriers will compensate for the lost of messaging revenue.

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Yes, it’s another Verizon-Vodafone rumor, this time of a $100B buyout

David Meyer — Thu, 25 Apr 2013 07:51:10 +0000

And lo, the Verizon-Vodafone rumor mill rumbles on. Just weeks after Verizon scotched rumors that it was planning a $245 billion takeover of its British counterpart, we have a new report, coming out of Reuters, that suggests Verizon is now preparing to buy out Voda’s share in their joint venture, Verizon Wireless.

Verizon owns 55 percent of the cellular enterprise, and – according to Reuters’s unnamed sources – it now thinks it can pick up the rest for $100 billion, half of which would come from bank financing and half of which would take the form of Verizon’s own shares. The U.S. firm apparently wants amicable discussions with Vodafone over this, but is willing to “take a bid public” if Voda doesn’t play ball.

I’ve asked Voda for comment on this latest notion, and am interested to see how any potential acceptance of the potential offer would overcome the hurdles faced in the past. The problem there, as another unnamed Vodafone investor previously explained, is that a sale of its share would hit Voda with an enormous capital gains tax bill – which is why a merger seemed more attractive.

As those in the U.K. know all too well, Vodafone is allergic to big tax bills, so let’s see how this latest outbreak of whispering pans out in reality.

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9 in 10 Londoners will soon have free Wi-Fi in Tube stations

David Meyer — Mon, 08 Apr 2013 10:43:11 +0000

From June, almost all Londoners should be able to get free Wi-Fi access in London Underground stations, after O2 became the latest major carrier to sign up as a wholesale customer of Virgin Media.

Virgin Media has been providing internet access in Tube stations since the Olympics in mid-2012. The service was initially free for all, but after the Games, Virgin started charging on a daily, weekly or monthly basis for those who aren’t customers of Virgin Mobile or the company’s fixed-line services. EE and Vodafone – respectively, the UK’s first and third-largest mobile carriers — signed up as wholesale partners in November, ensuring that their customers would also get free access.

O2, the second-largest mobile operator, has now done the same, with its customers getting access from June. According to Virgin, those three carriers account for 89 percent of London’s population, leaving only overseas tourists and subscribers of other carriers – notably the smallest of the big four, Three – having to pay up for access.

“Having O2 on board is excellent news for the thousands of people that use the Tube every day,” London Underground strategy chief Gareth Powell said in a statement. “Most customers will now be able to access live travel information or use social media to plan their social life while on the move.”

London Underground also used the announcement to reveal 12 more stations that will be Wi-Fi-enabled, including Baker Street, Bank, Earl’s Court and Sloane Square. The total number of stations bearing connectivity is now 120 (the Tube network has 270 stations, although many aren’t in central London, as the Wi-Fi-enabled ones tend to be).

I’ve asked Three whether it’s talking to Virgin about getting its customers into the scheme, and will add the response in when I get it.

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Vodafone shares dip as Verizon denies $245 billion takeover rumors

David Meyer — Wed, 03 Apr 2013 09:45:16 +0000

Well, that was quick. On Tuesday, the buzz was that Verizon and AT&T were thinking of bidding an eye-watering $245 billion for the UK-based carrier Vodafone. If true, this would have represented the biggest M&A transaction ever.

However, late on Tuesday evening Verizon issued the following statement, which keeps alive the perennial possibility of Verizon buying out Voda’s stake in their joint venture, Verizon Wireless, but which is also pretty categorical on the latest rumor:

“As Verizon has said many times, it would be a willing purchaser of the 45 percent stake that Vodafone holds in Verizon Wireless. It does not, however, currently have any intention to merge with or make an offer for Vodafone, whether alone or in conjunction with others.”

The denial knocked down Voda’s share price by – at the time of writing – 2.2 percent on intra-day trading. That said, according to Bloomberg, the rumor brought a 6.1 percent bump on Tuesday, so for now it did more good (for Voda’s investors) than harm.

According to Reuters, the problem with the Verizon-buying-out-Vodafone’s-stake scenario is that the $115 billion transaction would land Voda with a $20 billion tax bill – hence the idea of carrying out a merger instead. Apparently that’s now not going to fly, so it’s back to the drawing board.

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European carriers are moving away from handset subsidies, analysts find

David Meyer — Mon, 18 Mar 2013 18:30:42 +0000

One by one, the signs point to the decline and perhaps demise of the mobile handset subsidy. Whether it’s Vodafone paying newfound attention to the high-end pay-as-you-go market or regulators threatening to let contract customers walk out in the event of a price hike, there are frequent signs that carriers won’t be subsidizing the smartphones they sell you forever.

In the U.S., this is a new thing. It was only in December that T-Mobile USA announced its abandonment of smartphone subsidies, much to the interest of other players such as Verizon, but in Western Europe things have moved on quite a bit further. In fact, according to new research from Informa Telecoms & Media, almost 30 operators there have already dropped handset subsidies for some or most customers.

What’s taking the place of those subsidies? Leasing and financing plans, such as Vodafone’s Red Hot and O2 Germany’s My Handy schemes. According to Informa analyst Francesco Radicati, this makes it easier for operators to cope with the growing popularity of expensive smartphones:

“The rising cost of devices like the iPhone means operators have to pay increasingly large subsidies to offer ‘free’ phones. Financing allows operators to continue offering phones for a low up-front price without subsidizing them; as an added bonus, it makes it easier to market smartphones to consumers on pay-as-you-go.”

Why does this matter? Partly because it spells the end for lengthy contract lock-in periods — something operators have to consider anyway due to new consumer protection laws in countries such as Denmark — but also because it means a major shift in consumers’ perception of smartphone costs.

Absorbing handset costs into the associated monthly contract payments creates the illusion of the handsets being cheap or even free. This illusion has been handy in some ways — perhaps the smartphone revolution would not have been possible at scale without it — but ultimately it distorts the market.

Expensive toys don’t really come for free, and pretending that they do doesn’t help anyone. Two-year contract terms should not be the norm. Monthly payments should reflect only the service that the consumer gets in return; nothing more. On top of that, the need to absorb more and more upfront handset costs certainly doesn’t do much for carriers’ ability to invest in their networks. If subsidies really are on their way out, then good riddance to them.

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Deutsche Telekom activates Joyn for richer communications

David Meyer — Mon, 04 Mar 2013 15:44:23 +0000

Deutsche Telekom has adopted Joyn with immediate effect, allowing its mobile customers in Germany to use the platform to message, share files and videos and even play basic multiplayer games while talking to each other.

Joyn (technically known as Rich Communications Services or RCS) is an industry-wide initiative designed to counter third-party applications such as WhatsApp by augmenting the traditional voice-and-text functionality offered by the carrier. It doesn’t make a huge amount of sense unless your contact’s carrier also supports it – and so far, only users in Spain and South Korea can be sure that theirs does.

Vodafone and Deutsche Telekom are the two biggest carriers in Germany, though, and both now support Joyn. That means quite a lot of people in the country will be able to use the service, the features of which are free. As in other deployments, initial usage will have to be through a special app – the Android version is available now, and iOS will follow soon – while upcoming handsets from manufacturers such as Samsung and Nokia will have Joyn baked in.

It’s too early to tell how successful Joyn will be at this early stage. It will certainly have a tough time in the U.S., where so far only MetroPCS has set it live. In South Korea, though, operator SK Telecom said in February that it had garnered a million Joyn users in just a couple of months since launch.

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Startup Fenix now selling its off-grid batteries via Vodafone in Tanzania

Katie Fehrenbacher — Wed, 20 Feb 2013 17:26:14 +0000

San Francisco-based startup Fenix International, which makes a battery product that can charge cell phones and run lights in off-the-grid regions, has scored its largest deal to date with Vodafone in Tanzania. The telecom giant will sell Fenix’s ReadySet charger and its accompanying charging accessories in Tanzania, market the products via billboards and television spots in the region, and also create a fund to make loans to women entrepreneurs so they can buy the product.

The deal has nothing to do with charity. Vodafone sees a major opportunity in getting more electricity — in whatever form — to its customers in areas like Tanzania that have a large percentage of the population living off the grid. More electricity means more cell phone use. There are 46 million people in Tanzania and only 14 percent of them have access to grid power — the rest of them use a combination of car batteries and diesel generators when they need access to power. Vodafone has about 10 million subscribers in Tanzania.

Fenix’s ReadySet battery can be sold with a solar panel charger as well as a bicycle charger (riding the bike in stationary mode charges the battery), and the simple design of the battery is what makes it so accessible to customers. Users can charge cell phones and plug in lights using basic connectors like USB and car lighter ports. (Check out Kevin Tofel’s review of the ReadySet).

The device costs around $200, which is a relatively high price for that area. But the people who will buy the ReadySets are mostly entrepreneurs in villages that will use the battery to sell cell phone charging services and charge their shops after it gets dark. Entrepreneurs can make $40 to $50 per month from offering cell phone charging services.

Vodafone is already working with these types of entrepreneurs on other services. Vodafone created a mobile payment system called M-Pesa, where people can exchange cell phones minutes for goods and services. There are 4.5 million people in Tanzania using the M-Pesa service, and there are 40,000 agents that operate as M-Pesa entrepreneurs (like human ATMs with cell phone minutes).

It’s these 40,000 M-Pesa entrepreneurs that Vodafone thinks will be particularly attracted to ReadySets. With reliable off-grid power, these local business people can keep their phones charged longer — and provide more mobile banking services — and also they can start selling cell phone charging as well. Vodafone said that in a pilot in Tanzania with the ReadySets, it saw 14 percent more average revenue per user across the M-Pesa system, because more people’s phones were charged to receive and give money.

Scoring a deal with Vodafone is a game changer for Fenix. Vodafone has some 400 million subscribers globally, and 100 million of those are off-grid customers. Globally 1.3 billion people live off-grid, and 600 million of those are cell phone subscribers. Fenix also is working with MTN, the largest telco in Africa with 180 million subscribers.

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The results are in: UK 4G spectrum auction has five winners, raising $3.62B

David Meyer — Wed, 20 Feb 2013 07:22:54 +0000

The UK’s 4G spectrum auction has raised £2.34 billion ($3.62 billion), with BT and the country’s four main mobile carriers winning new spectrum that will allow them to roll out LTE services.

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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