Thursday, January 27, 2005
Walking down the street behind my office today, I had to rub my eyes and look again to make sure I wasn't hallucinating when I saw this poster in the window of Carphone Warehouse. GBP9.99 for 500 minutes, 100 texts and a free phone. Go online and it's GBP2.99. 500 minutes is already a pretty big plan by UK standards, but consider that 100 free texts might each pre-empt a largely pointless 150-second call, and we might say that this plan gives 750 minutes of value for GBP0.004 per minute.
I don't see any sign of it on the corporate site, but Reuters newswire is reporting this morning that HomeChoice has 15k subs in the UK currently, 85% of whom are on triple play packages. The previous datapoint I had from the company was that 75 - 80% were opting for telephony, so this marks an apparent improvement in uptake. The 15k subs number implies 360 net adds per week since re-launch, or thereabouts. As I commented yesterday, they're turning up the marketing volume and increasing visibility as the footprint expands.
Anecdotally, some friends of ours live just a bit further east in South London, an area not served by cable. They took Sky when they moved in, because they wanted multichannel and Freeview wasn't really off the ground at that point. Now they think that Sky may just a little bit too much TV for them, and they are also candidates for migration to broadband. I mentioned HomeChoice to them just before Christmas, and now they eagerly await service expansion to their local exchange. This is the sort of market profile where HomeChoice could do some serious damage - Sky subs with DSL already, or looking to migrate to broadband soon.
I don't know how widely picked up this has been, because I am way behind in my reading, but my colleague covering mobile noted yesterday with some surprise that Vodafone's December KPIs show an increase of 3G data cards to 170k worldwide. The company was already at 100k in June, so growth has averaged a little over 10k per month worldwide in H2 2004. 170k users spread over total client base of 150m is penetration of a cool 0.1%, on a product which was introduced nearly one year ago. Ouch.
Wednesday, January 26, 2005
Ted Shelton shares some stats on the tireless Jeff Pulver's newest venture Bellster. Yesterday 408 nodes became 467, and Jeff emailed me from France an hour ago to report that there are now 490 registered nodes, with 712 routes into 22 countries. This reminds me of those heady early days of Skype...
Maybe I'm just imagining it, but I feel as though I'm encountering a lot more telecom marketing these days in the UK - maybe I'm just looking for it more now. This article discusses BT's change of agency for a £7.5m radio campaign, and speculates that BT may be consolidating all its media buying in a single agency. Unified marketing for a fragmenting market - probably a smart move. Meanwhile relative newcomer HomeChoice seems to be doing a lot on AM radio, and has now taken on Martin Freeman from "The Office" as spokesperson for its new campaign, in place of Matt Lucas, himself a hugely recognizable figure from the extremely demented, but popular, "Little Britain." Glad I've loaded up on advertising plays in my non-telco model portfolio.
This is the sort of announcement that should worry European mobile players. Earthlink, long expected by many to launch an MVNO in the US, has partnered with SK Telecom of Korea. To date, the European MVNO phenomenon has been a "family affair," limited to European operators causing relatively minor trouble in select markets, and a few local entrepreneurs like Richard Branson and Stelios Haji-Ioannou. I wonder how many investors have factored in MVNO disruption from outside Europe, and particularly from Asia. SKT has a strong balance sheet, as do the Chinese cellcos, and as their own markets get tougher who's to say they will remain content in Asia? There's a sleeping giant out there called UGC (or Liberty Media, if you prefer to think of it that way), with a nascent triple play strategy in its huge cable footprint, but no mobile component. I wonder how long that will last, and if it changes, who the partners will be?
Tuesday, January 25, 2005
Here’s a feature on Samsung’s involvement in the Versatel IP-TV project, from Het Financieel Dagblad (free registration required). It’s in Dutch, but you can run it through the questionable (but free) online translator of your choice, and find that some cogent messages come through. Samsung Benelux MD Frans Hulshof stresses how important this project is as a proving ground for Samsung in Europe. He also muses on the impact of generational changes in communication styles and tools. Most interestingly, he contrasts the coordinated national broadband policy of South Korea with that of the Netherlands, where he says the government “gives too little direction.” This in turn gives rise to a number of independent projects by telcos, municipalities, housing corporations, and construction firms, creating an “exciting, but at the same time, chaotic” market environment. Viva chaos!
Cable & Wireless has issued its trading update to the end of December. At year-end, 68 exchanges were unbundled, and another 317 are in the works. C&W describe the response in the London market as "encouraging." We should get more insight mid-year, accompanying the full service launch.
UK net measurement firm Hitwise have published their January update for the UK, revealing that online shopping accounted for 12% of all UK web traffic in December, exceeding 13% in the first week of the month. Overall, the YoY increase in traffic to commerce sites was 23%, the strongest ever seen. Top generic search queries were as follows:
1. mobile phones
2. digital cameras
5. mp3 players
6. fancy dress
10. dvd recorders
(For those outside the UK, "fancy dress" refers to novelty costumes, not something Dolly Parton would wear.)
Top ten branded queries were:
3. playstation 2
4. samsung d500
7. dell computers
Monday, January 24, 2005
The Times is all over the Google story, but a) reads it as an assault on BT (!), b) makes reference to a mythical Japanese company called Softband (that one got me), and c) omits to say that the blogosphere got there first. The Google job posting is casually presented in passing, the implication to the uninformed reader being that it is a Times scoop. Then again, I guess you don't want to legitimize a medium which has the potential to eat your lunch...
Look out world, the Cybertelly provisional site is up, and is full of all manner of intriguing statements, including intimations that P2P voice is one additional application which is possible on the platform. They also push the right button for me in embracing the idea of "living-room TV production." I spoke with Guido Ciburski late last year, and he said they were looking for 3 - 5m users in year one.
Given all the telco TV mania running through the sector, and all the premium content deals being signed for TV-over-DSL (not to mention mobile), it's interesting to ponder the implications of a story like this one. Mediaset's MHP set-top boxes deliver pay-per-view matches on a prepaid, anonymous, a la carte basis, and initial demand looks to be very strong. Mediaset has invested EUR118m in acquiring the rights for the eight top clubs in Serie A, and c.EUR70m in infrastructure to date, and for that it can deliver pay-per-view matches at EUR3 per pop. In markets where MHP has been adopted and where DTT tuners may end up co-existing with DSL modems in set-top boxes, it's going to be interesting to see what the various parties get out of the mix. For the telcos, my guess is a bit of churn mitigation, and very little else.
This, via a Dutch reader. Yesterday was the sign-up day for the Ons Net ("Our Net") FTTH project in the Tongelre district of Eindhoven. Check out the very long queues of people waiting to sign up, and the almost palpable sense of excitement, in these photos. It would be interesting to interview these people and find out their motivations for signing up, but one thing is for certain: anyone wanting to do anything serious on the upstream link would be naturally drawn to Ons Net, which is five times faster than almost all of the throttled cable and DSL offerings in the market.
UPDATE: Stumbled across this bit of news from the UK a bit later. Upstream throttling and usage caps like these will drive users onto fiber, where they are lucky enough to have the option.
Whether you believe the telco transformation story, or that the sector has a one-way ticket to Palookaville, there is certainly plenty of money to be made in the meantime by sucking the blood of the patient. This Financial Times piece cites the fact that globally, telecoms generated $3.8bn in investment banking fees in 2004, putting it in second place behind financials. This morning, France Telecom, 2004's sixth most-active company, is at it again, proposing to take out the Equant minorities for EUR564m. Ch-ching!
Saturday, January 22, 2005
Thursday, January 20, 2005
Yesterday I received a box from Skype, something I wasn't expecting. Inside was a nice new year greeting from Mr. Zennstrom, and a gatefold box containing two disks with the Skype application (one for me, one for a friend), two headsets, a bunch of Skype stickers and "Skype me" cards. I assume that this is not just a one-off for "Skype friendly" analysts and journalists/bloggers, and I'm dying to see whether these boxes start turning up in music stores, supermarkets, or on the London Underground. Is this the beginning of a visible marketing campaign from Skype, and therefore of a push towards a new wave of adoption, more mass-market in nature?
On a separate, but related, note, having a phone conversation with someone a few minutes ago, they relayed an anecdote which rang my bell. Apparently, there is an 81 year-old granny somewhere in Australia who spends her entire day Skyping children and grandchildren around the world. Maybe Skype's marketing pitch should be "Your granny is using it, why aren't you?" or "Skype - it's not just for pimply geeks anymore."
The preceding post elicited a response from a Dutch reader, who points out that the Nuenen project achieved 97% buy-in in the project area, with no response from local incumbent UPC. Maybe cable paranoia is a company specific phenomenon.
Update: today's Financial Times interview with John Malone seems to express concern that the UK market may see a fiber deployment, but there is no mention of fiber in the Dutch market, perhaps because the latter is municipality-driven.
FT: And what about the UK? Last time we spoke, John, you mentioned that you were unlikely to look at the UK until you had a clear idea of what BT’s intentions were. Has that changed?
JM: Well I think you have to remember the context. Rupert [Murdoch] with Sky has such a strong position in video content. Any cable operation was dead on video margin, so they had to look to telephony and data to justify capital spending and the operating costs of the business.
NTL and Telewest succeeded in making a profit in data and telephony but would they ever wake up and re-enter the fray in the video area? Local telecoms can spend large amounts of capital on challenging them. Look at Verizon in the US laying fibre to the home. If BT were to do the same, and given that cable has no leverage on video because of the strength of Sky, you'd be more nervous about the UK than the markets in which UGC operates.
Where you have real use of triple play cable is terrific. But where you're denied one of those assets for structural reasons or because control lies with someone else then you face a problem.
FT: Given all of that do you think a merger of NTL and Telewest is inevitable, and would that be an attractive proposition for Liberty?
JM: I think the prospect of that merger is very large, if only to take BT on on country wide basis. The scale economics are clear in telecom but they still have an issue on the video business. We sold our interest in Telewest because it wasn't’ a big enough position to be strategic and we were concerned that cable companies could die against telecom rivals, especially if they didn’t have a profitable video business. We have to see how things evolve. If BT stays asleep theoretically cable could be a very profitable business.
Wednesday, January 19, 2005
Tomorrow digging begins on the FTTH project in the Dutch town of Soest, as part of the 55,000 home project from housing company Portaal. Out of 4,000 target properties in the town, 1,500 households have signed up for 10Mbps symmetrical internet, TV and VoIP for EUR50 (including VAT). So guess what happened today? Local cable incumbent Casema has radically altered pricing in the town, allowing existing CATV subs to add internet and telephony for EUR19.90 per month, bringing the total bill to EUR34.95. There are some fairly tasty comments in response to the story on WebWereld, one of which points out that a comparable package put together a la carte costs EUR78.06, and others of which question whether Casema is abusing its incumbent position and offering services below cost.
Map this development across the various parts of the Dutch market set for fiber deployment, and we get a pretty big shock to the broadband pricing environment, at least in a localized sense. This makes UnitedGlobalCom's purchase yesterday of Zone Vision look like an insurance policy. Anyone who wants to deliver channels on another platform is going to have to deal with their content arm, like it or not. Where the company's position in distribution is under attack, it at least has content to fall back on. For companies stuck in pure distribution mode, the writing is on the wall, though I have to confess to being taken aback by the rapidity of Casema in responding so quickly and dramatically to a project involving 1,500 homes, which won't even launch services until April.
Tuesday, January 18, 2005
Just the other day, in putting together our new Global Monthly note, I constructed a couple of model portfolios - one of conventional telcos, the other companies in ancillary industries which might be beneficiaries of disruptive technologies, greater competition, and telco adventurism into new markets and product offerings. Four of the ancillary stocks I chose (Havas, WPP, Google and Yahoo!) were on the basis of ballooning expenditures from the sector on advertising. Today we get some confirmation of this view from Nielsen//NetRatings, who find that in the US, telcos are the fastest growing segment of online advertisers, as measured by share of impressions. Within the telecom industry segments, the only category which grew its share of impressions in 2004 was internet telephony and messaging (6% of total industry impressions, up from 2% last year). Little Vonage took 10% of total industry impressions, double the level claimed by BellSouth and AWE. Clearly they're buying the right real estate, but that is a limited commodity, and I would expect it's going to get pricier this year.
The past couple of days have given us some signposts for the coming year, suggesting we're going to be seeing a ramp up in M&A and capital raising in 2005, related to content acquisition, industry consolidation, and expansion/acceleration of capex plans, all relating to the ultimate goal of the elusive IP Triple Play:
- Yesterday Liberty Media subsidiary UnitedGlobalCom announced the acquisition of UK-based pay-TV house Zone Vision Networks, which brings UGC control of Reality TV (claiming 125m viewers globally), film channel Europa Europa (6m subs) and entertainment channel Romantica (also 6m viewers). UGC already held 49% in Reality TV, and Zone Vision had already teamed up with Liberty's Japan unit on a local version of Reality TV, so it was practically in the family already.
- This morning Liberty has announced a buyout of UGC minorities, for either $9.58 per share or 0.2155 Liberty Shares, and the newco will be known as Liberty Global. I think this sort of development was inevitable, though it comes sooner than I expected.
- The wires are abuzz this morning with speculation that Tiscali may have a funding shortfall in its business plan (remember it has IP Triple Play aspirations in its major markets) of EUR50 - 100m after it (presumably) makes its EUR250m debt maturities in July. This suggests that the company needs: 1) further disposals; 2) a change in strategy; 3) an equity offering; or, 4) an aquirer.
- Fastweb yesterday dropped a bomb on the market by announcing an EUR800m rights issue to fund its revised strategy, which now focuses on marketing "single-play" DSL lines in an expanded footprint as an upgrade path towards Triple Play over time. The expected short term impacts are significantly higher revenues (40% CAGR over two years vs. 24% under the old plan), slight margin compression, and a near-doubling in capex over the next two years. All of this is aimed at delivering higher absolute revenues (20% above previous plans) and EBITDA in the long term, and the sweetener proposed is that projected dividends under the new plan are EUR1.5bn by 2010, vs. EUR1.0bn previously.
Having pursued a fairly disciplined Triple Play strategy for four years, Fastweb is now changing gears and appears to be going for land-grab, which may ultimately be the right answer, but investors could also be forgiven for thinking that some of this sounds very much like the familiar formula of the bad old days (1999 - 2000) - accelerated capex and acquisitions aimed at delivering higher returns five years out. All of this sounds great, so long as DSL/cable pricing remains stable, alternative access technologies don't drive access pricing points through the floor, and, crucially, people continue to have an interest in paying to watch television.
French regulator ART has launched a blog (see upper right corner of home page "Le Blog") and has also released a Q4 update on the DSL market (see item entitled "6,1 millions d'accès ADSL et 1,6 million de lignes dégroupées en France"). Partially unbundled lines total 1.5m, fully unbundled just under 100k. The comparative tables show France to be lagging some other countries, notably Italy, in the proportion of fully unbundled lines, so expect a call to arms over this issue, coupled with further aggression from Iliad. Also note the cancer-like progression of unbundling from 2002 to 2004 as shown in the color maps.
Monday, January 17, 2005
The Wireless London project has put together a series of lectures pitting geeks against (or alongside) architects to discuss the future possibilities for technology in the built environment. The first is tomorrow night and features Armin Medosch, with whom I shared an interesting panel on free networks in November '03 at the DMZ Festival. Should be very interesting.
Date: Tuesday 18th Jan, 2005, 6:30pm-8.00pm
Title: Civic Communications
Speakers: Armin Medosch vs. Usman Haque
Location: Architectural Association
36 Bedford Square
London WC1B 3ES
No sign of an announcement on the website, but iptel is opening an IMS development center in Prague. Over the weekend, I received the following email:
January 15th, Berlin, Prague -- iptelorg GmbH, leading SIP server vendor, expands its reach to the IMS market. After establishing leadership on the ISP market iptel began to develop a server suite for use in next generation mobile networks. On January 15th, iptel opened up a new development center in Prague which will be fully focused on creating a standard-compliant highly scalable IMS infrastructure.
Jiri Kuthan, CTO at iptel, said: "SIP success in the ISP market has gained market's confidence in our technology. The SIP VoIP technology is borderless and we are only a baby-step ahead of implanting our ISP experience to the IMS market."
This item from Brand Republic caught my eye today. If market research and consultancy businesses say that client input no longer indicates a case for having separate practices in telecom and IT, then surely financial investors are thinking much the same thing. Any bets on which one of the brokers will step up to the plate on this issue first? My feeling is that we probably shouldn't hold our breath. The quest for relevance continues...
Friday, January 14, 2005
My sources tell me that Vonage UK has appointed a CEO. I know who it is, but don't have the all-clear to say so. I know him, and he's bright and very experienced, particularly in startup brand building and wireless arenas. This is purely speculation on my part, but given what Vonage has going with UTStarcom on the handset front, and also how many hotspots there are in the UK (the second most unwired country in the world, according to Jiwire), I have to wonder if there is some strategic connection down the road. For example, once the GSM/Wi-Fi handsets start to roll, how about a full-blown MVNO?
Yesterday afternoon Telecom Italia disclosed a deal with Mediaset for pay-per-view rights to selected soccer matches of seven additional teams over its DSL platform. No financial details were disclosed, but I'd bet it didn't come cheap, because the teams included are the cream of Serie A. For the consumer it looks like reasonable value - the matches included can be purchased for EUR24 for the entire package (second half of the season) or EUR2.50 on an a la carte basis for live matches, EUR0.50 for recorded matches. Then again, the same matches will be available over DTT using the prepaid card slot on the set-top box. I will be very interested to see how the relative viewing shares of Mediaset and TI match up, if they are ever reported.
This comes on the heels of Versatel's coup in the Dutch market last month. Speaking of Versatel, Het Financieele Dagblad has a story on potential negotiations between Versatel and broadcasters SBS and RTL. My Dutch is a bit rusty, but the short Bloomberg article this morning translates Versatel as saying, "We will sit at the table with SBS and other commercial TV broadcasters, but we will not pay just any price." John de Mol is a canny player, no doubt, but having landed the soccer rights I assume there's also mounting pressure to build up some critical mass in terms of other content.
Map this sort of development across the rest of Europe, and we might just have us a little content bubble developing. STOXX Media sector has outperformed Telecom by 1% since the start of the year, and several stocks got an additional pop yesterday from Lord Hollick's (now of KKR) reported comments that an acquisition of ITV would "have a nice ring to it." As I argued in our year-end edition of the Daiwa Global Telecom Monthly, the best way to play telecom themes in 2005 may actually be through ancillary sectors, and Media may be a case in point.
On the train home last night, I came across this article on Blinkx in the Evening Standard, an evening edition tabloid not exactly renowned for its tech coverage. To their credit, the Blinkx team is taking the message to Joe Sixpack (actually, Fourpack in the UK) early in its life. For those outside the UK, the Standard is very widely read by commuters heading home, so there's a reasonable chance that many many thousands of non-geeks found out about Blinkx yesterday. I'm curious to see what other coverage the company gets in the days ahead. There's an interesting range of content suppliers taking part already, including the BBC, ITV, Sky and Fox. Looks like the TV industry is warming up to internet distribution models, though, bear that I am, I have to question whether this will generate incremental viewing, or in the case of subscription services like Sky, will mark an incremental step towards pushing viewers away from the core TV offering.
Thursday, January 13, 2005
UK mega-super-dooper regulator OFCOM certainly lives by the credo that idle hands are the devil's workshop. Today it has issued two new consultations on UWB and spectrum management. The latter identifies eight blocks of spectrum proposed for allocation. It's interesting to note that the DECT/GSM guard band has been approved, representing a win for the community networking groups in the UK who have been lobbying on this issue. It's also interesting to ponder whether some of the 470 - 845MHz analogue television frequencies might end up seeing use in 802.22 development for the UK. Here's a list of the frequencies, copped directly from the OFCOM press release:
410-425 MHz, 870-921 MHz (part only) (available for award from2005-2006) - Available as a result of licensee insolvency, these bands could be usedfor radio services for businesses, additional capacity for the emergency services and programme making.
1452-1492 MHz ('L band', available from 2006-2007) - Possible uses include broadcast multimedia, new mobile applications and digital radio.
1781.7-1785 MHz paired with 1876.7-1880 MHz ('DECT guard bands', available from 2005-2006). Previously reserved as a buffer between 2G mobile and cordless telephone (DECT) frequencies. Possible uses include innovative, low-power GSM applications.
1790-1798 MHz (available from 2007-2008) - Presently used by the emergency services but additional capacity may become available by 2007-08. Possible uses include wireless broadband applications.
2010-2025 MHz and 2290-2302 MHz (available from 2005-2006) - 2010-2025 MHz was reserved for IMT-2000 (3G) systems (but is unused) and the 2290-2302 MHz band was recently returned to Ofcom by the MoD. Could be used for next generation mobile applications or wireless broadband.
2500-2690 MHz (available from 2006-2007) - Presently used by programme makers for outside broadcasts. Possible future uses include next generation mobile applications and wireless broadband
10 GHz, 28 GHz, 32 GHz, 40 GHz (available at varying times, from2006-2008) - Significant amounts of additional capacity for a range of new services.Includes licences not assigned in the previous auction of 28GHz frequencies.
The document also discusses three other bands, on which further work is required before identifying a date for release:
174 - 230 MHz (part only) ('Band III') Ofcom has proposed additional awards in its separate review of the radio industry, published on 16 December 2004.
470-854 MHz ('digital switchover spectrum') Currently used for analogue television but new options for use will emerge with the transition to digital broadcasting. 112 MHz of spectrum could become available. Proposals dependent upon international negotiations at the Regional Radio Conference in 2006.
3.6-4.2 GHz Presently used for high speed fixed links, satellite services, and fixed wireless access. Subject to further work on sharing issues, additional capacity may be available for further terrestrial applications.
Carphone Warehouse has issued a Q4 trading update showing that subscribers to its immensely popular TalkTalk carrier pre-selection product grew by 114k in Q4. This is a weekly net addition rate of around 8,700, which is the lowest for four quarters and a significant downshift from the Q3 rate of 10,424. Difficult to say at this point what the reason is, but probably a number of things - perhaps Tele2 is gaining some momentum, perhaps other CPS players are getting their acts together, perhaps BT winback tactics are biting, perhaps it's Skype...
Wednesday, January 12, 2005
Om cites a devastating report from Security Focus of major security breach at T-Mobile USA. It's quizzical as to why T-Mobile never issued any public warning, even though it apparently knew of the intrusion as long ago as July of last year. Perhaps its hands were tied by law enforcement, who can override the requirement to report if the ongoing criminal investigation is likely to be compromised in the process. Whatever happened, the backlash to past customer data leaks at Yahoo! Japan make me feel a bit concerned about the near-term reputational issues for T-Mobile as this story circulates in coming days. First quarter net adds could well suffer.
IR Web Report has an interesting ranking of telco IR sites. Somewhat surprised to see Vodafone on top, given the level of disclosure coming out of the company generally, and the various changes in reporting lines which left analysts winging it at the last set of results. KPN and BT score relatively well, and both are to be commended for getting KPIs which analysts have received on the sites for all to see, though in the BT site they are .pdfs rather than Excel, which makes more work for someone independent wanting to amass information or build a model. DT's high ranking is also well-deserved, given the improvement to its site in recent months.
I tabulated this data today as part of a research project. I've got my own interpretation and uses for this data, but I thought I would share and let you draw your own conclusions, if any. These are the number of returns for 50 selected Google search queries. Some of the relationships are amusing - for example, I like the fact that "podcast" is about to overtake "Viacom", that "iPod" is bigger than "broadband", and closing in on "marriage," and that "MP3" is apparently more widely sought (on the net) than "food."
Internet - 608,000,000
Computer - 373,000,000
TV - 349,000,000
Phone - 297,000,000
Yahoo! - 273,000,000
Water - 253,000,000
Love - 252,000,000
Air - 227,000,000
MP3 - 224,000,000
Food - 214,000,000
Radio - 193,000,000
Microsoft - 186,000,000
Blog - 157,000,000
Google - 146,000,000
Christmas - 139,000,000
God - 132,000,000
Telephone - 101,000,000
Television - 68,500,000
AOL - 61,400,000
BBC - 45,600,000
ABC - 45,000,000
Fox - 41,700,000
Disney - 41,600,000
Marriage - 41,000,000
iPod - 38,100,000
Broadband - 36,600,000
CNN - 23,400,000
Britney - 18,700,000
George Bush - 18,400,000
VoIP - 17,300,000
CBS - 15,900,000
3G - 15,700,000
Wi-Fi - 15,500,000
Jesus Christ - 14,200,000
Michael Jackson - 13,800,000
U2 - 13,800,000
Madonna - 12,100,000
Eminem - 12,000,000
Time Warner - 11,900,000
The Beatles - 11,400,000
Olympics - 11,400,000
P2P - 10,600,000
NBC - 8,470,000
Instant messaging - 6,490,000
BitTorrent - 6,340,000
Bloomberg - 5,750,000
eDonkey - 4,730,000
Skype - 3,530,000
Viacom - 1,120,000
Podcast - 1,070,000
Monday, January 10, 2005
Amidst all the enthusiasm surrounding telco IPTV, forgive me for being curmudgeonly, but I find it interesting that newsflow surrounding TV as an activity looks pretty rugged, and makes me question whether the telcos are racing to recreate something which is in terminal decline. Today we see reports in Advertising Age that NBC is going to incur $50m in "make good" payments to advertisers because viewers in the 18 - 49 category are below minimum guarantees. Last week in the UK we had dire predictions about ITV, and the 2005 projections for the UK by the Advertising Association showed TV ad revenue growth as one of the weakest segments in the entire market. In contrast, internet advertising is the expected savior, contributing 1.3 percentage points to total industry growth of 4.2%, and Jupiter argues this gives the internet advertising players some considerable momentum and pricing power in 2005. Look at pages 47 - 50 of this report and marvel at the decline of TV as an activity, displaced by the internet - a process which seems to intensify with internet "maturity" levels of users.
I don't know if everyone in the UK voice market spent too long at the pub at lunchtime today, but based on some of the comments coming out in the wake of the Post Office's push into voice, we may be headed for a punch-up. Earlier today, Reuters ran a story quoting BT's head of consumer, Gavin Patterson, as saying:
"If customers are looking for good value from the Post Office, frankly they're
better off sticking to stamps."
This has just been followed by a rather bad-tempered response from Carphone Warehouse. Presumably, potential customers who are interested in the service will have more success than I have had at accessing the site, unless they're expected to sign up by mail.
Seriously though, for all the negative press and poor performance stats, there are still a lot of people out there who respect and trust the brand, and who have more regular contact with the PO than with BT. Plus, the Post Office is the only entity in the UK that I can think of which currently serves more households than BT, so the 1m customers they aim to take by 2008 looks to be a pretty low hurdle. Will the PO stop at voice? Why not offer broadband as well? The key supplier/enabler of the voice product is Cable & Wireless, which now owns BullDog, the most adept of the unbundlers in the market...
My personal prediction is that 2005 is the year of VoIP press coverage fatigue, at least for those of us who have been writing and talking about this stuff for more than two years. UK business paper The Business has devoted its Column Seven piece to VoWi-Fi, and it's a pretty decent and balanced read on the whole. It will probably leave a lot of readers saying "duh!" but then again, this is good front page coverage in a mainstream paper, which should tell us all something important about where VoIP is heading. I also spoke to a journalist last week who is writing what she thinks may be a global cover story on VoIP for Newsweek. Niklas Zennstrom as Time's man of the year in 2005, anyone?
Friday, January 07, 2005
We wrote back in July (albeit in passing in this longer piece) about the UK Post Office's imminent entry into the voice market, and this afternoon Reuters reported that plans are to be unveiled on 11th January. I looked in the site earlier and tried to click through to the site where consumers can sign up, but the site seemed to freeze then, and I haven't been able to get into it since. Perhaps it's innundated with potential customers. Reuters has also gotten wind of the Vonage UK launch and run a slightly silly story also namechecking Skype. Wonder if they stumbled onto it via eurovoip, or perhaps my link to it? No credit given in their story, if that's the case.
This morning, while researching something totally unrelated, I stumbled across this spreadsheet from the UK Office of National Statistics, which shows that 9% of adult respondents to the October survey said they had made "telephone" calls or conducted video conferencing over the web. The previous two quarters returned 7% responses.
Here's some disruption for you. It came to my attention yesterday that a major Wall Street firm has changed IT policy and is now blocking employee access to Bloglines, a variety of specific blogsites, and financial forums like Yahoo! Finance. I assume this is compliance-driven (i.e., to prevent employees posting comments which could influence share prices), but in an integrated house with analysts, sales and fund managers all theoretically trying to make money for the firm, one would think that access to any and all sources of information would be encouraged as part and parcel of the task at hand. (Not on company time, my boy. Get back to your desk and write some research on how important this blogging thing is going to be, whatever it is.)
"Blog, schmog," I can hear you say, "It's all trivia and cross-posting of old news, with some pet photos thrown in." Well, if one ever needed proof that some blogs deliver real news first, check out my virtual friend Om Malik, whose scoop on the Six Apart deal earlier this week has been referenced on other blogs 355 times (according to my Bloglines account), and Slashdotted to boot. Here's a deal that may have some implications on some real-life listed companies like Yahoo! and Google, though if you worked for Company X, you would have been out of the loop until it appeared on CNBC (if indeed that happened). If I were covering the financial sector, I would have some serious questions about company culture and management mentality within this firm.
The good folks over at ECTA have published their latest update, this time including EU accession countries. The inclusion of these newcomers must serve as some comfort to countries like Belgium and the UK (ULL 1% of total DSL lines in each), as they can no longer be identified as rock-bottom. Greece, at 5%, puts both to shame. The market may be much smaller, but it's also less concentrated, even at this early stage.
Give 'em a quarter, and they'll find a way to add to your pain. French broadband badboys Free are boosting speeds for their ADSL 2+ product (launched 20th October at 15Mbps) to 20Mbps, with all the other customary goodies thrown in, for the same low, low price of EUR29.99. As my southern brethren are fond of saying, you can't beat it with a stick. Given all the money being shelled out for cable assets in France over the past months, it's going to be interesting to see how the cable players (UPC in particular) position themselves in this increasingly hostile market.
Thursday, January 06, 2005
Eurovoip has the scoop on Vonage's oh-so quiet launch in the UK. In the absence of naked DSL in the market, and with a very small number of fully unbundled lines, the dilemma they face is that any DSL customer still paying PSTN subscription to BT (virtually all) is paying at least GBP10.50 already for BT Together calling option 1, under which evening and weekend calls are virtually free (5.5p for 60 minutes). Arguably, the year that Vonage has been talking about launching in the UK has been ample time for BT to circle the wagons by restructuring tariffs, and getting its game together on the BT/Yahoo! Communicator. That's not to say that customers won't save money with Vonage UK, but it may be a harder sell in January 2005 than it might have been a year ago.
I received an email from Gary Lerhaupt at Torrentocracy/Prodigem today, sent to all those in the beta. Each of us has been given two invitations for friends to join up, Gmail-style. "Prodigem has cleared its initial speed bumps and is ready for some heavier terrain," he says. My invitations are already spoken for, but I will be keen to see the rate at which new invitations are added to the account in future.
Wednesday, January 05, 2005
It's official, it's available. Group chat for up to 50? Sounds like a nightmare, but someone will like and use this, and I undoubtedly will be one of those people. I'm also very impressed with the entire subculture of Skype-a-holics out there who are pursuing new and interesting ways to put it to use, and the small (but growing) number of equipment makers out there who are coming to the conclusion that this is something they need to position themselves for, sooner rather than later. Let freedom ring!
Tuesday, January 04, 2005
Ted Shelton (who has landed sponsorship for his blog!) has two interesting posts on the rise of IPTV in 2005. The second is an interview with Brian Sugar, the marketing VP of 2Wire, in the wake of yesterday's SBC announcement, and he has some frank observations that one probably wouldn't hear coming out of the SBC PR department. It is also interesting to note that BT (the other Yahoo! co-branded DSL partner) gets name-checked in the piece, as one of 2Wire's alliance members, all of whom Mr. Sugar says the company is "pitching with a satellite partner." In the UK this means BSkyB, of course, and frankly I have a hard time seeing it. The one distinguishing factor that sets the UK apart from the other alliance member markets is the presence of a rapidly-growing DTT platform. In other words, BT needs Sky a hell of a lot less than SBC needs the Dish network, and presumably it can achieve much of what it wants to do in the TV space, a lot more cheaply (and with more control), via incorporating Freeview rather than teaming up with Sky. I could be wrong, but it doesn't feel consistent somehow. I also expect the regulator would frown on such a deep tie-up, in any event.
Frequent visitors to this site will recall that one of the issues I'm keenly interested in is the disruption of my own industry. This has largely focused so far on the ever-expanding ranks of independent, smart-aleck blogger-types, who insist on spoiling our fun by writing timely and insightful pieces on the industry with no compliance or political constraints - and for free, at that. (As one industry CEO said to me last year in response to a presentation I gave him on Skype - "We ought to be lobbying to get this sort of thing stopped!")
Today, along with the 1,486 other unread emails I got while enjoying my holidays, I received a piece of conference-promotion spam - but it is spam with a different flavor. The organizers have come up with a two-day conference themed on a single company - Vodafone - but they are doing it from the perspective of suppliers, content partners, and competitors. The company itself is apparently unrepresented.
I like this idea of creating a conference with a Vodafone-shaped hole in the middle, as it will undoubtedly shed more light on the company than its own paltry disclosures and filings, and I am trying to imagine how the people out in Newbury (and their lawyers) feel about this sort of event. Not to mention the 42 analysts covering the company. At GBP1,880, I won't be attending, but I applaud the concept.
I returned to the office today to find an email from my erstwhile colleague Kota Ezawa (handsets/semiconductors - one day I'm going to pester this man into starting his own blog) saying that he had conducted tests of the Vodafone 3G service around London during the Christmas holidays. He tested the SonyEricsson V800 in 45 separate locations (10 residential, 22 retail/commercial, 10 office zones, and 3 in-car) in Central London. His summation - "Again, 3G has jumped the gun." While he found coverage on main streets and around Tube stations to be near-ubiquitous, in-building connectivity was poor. Only one quarter of attempts at in-building connections succeeded. The other disappointment was in the car at speeds above 30mph/50kmph, where he found connecting nearly impossible.
Anyone looking for a bit of sector sentiment support from M&A activity in Europe this year hasn't had to wait long. An article in La Tribune this morning claims that Neuf Telecom is looking to take over Tiscali France's operations, which would add 386k DSL subs to its existing base, which was at 500k unbundled lines at the end of September. This report comes only one day after Tiscali announced the separation of its core Italian units from the holding company structure, which houses everything else. This presumably lends some credence to talk of consolidation in the Italian market.
UPDATE: Reuters later ran a story quoting Tiscali as saying it had no plans to exit France, and suggesting that, in publicly exploring its options in France, the company was trying to give comfort to creditors.
Happy New Year to all. Back from a nice break, I hate to start the year off on a downer, but the Asian disaster provides yet another example of how this emerging decentralized media phenomenon is gaining momentum, particularly with new distribution applications coming to the aid of content producers. Chris Holland's tsunami video posts at Prodigem have had a few thousand downloads, and Ian Clarke, founder of the Freenet Project, has posted some tsunami videos using his Dijjer P2P cache solution. This is going to be an exciting year, and certainly can only get better from here (I hope).