Monday, December 15, 2014

BT buying a mobile network

Yesterday The Sunday Times ran another story on BT buying a Mobile Network for £10bn.  The story outlined the options faced by the CEO and his team without asking the questions a shareholder might want answered.

If the Mobile sector offers such riches to BT why are the two largest Networks prepared to pull up sticks and exit the market?

How do the Customers of EE or O2 overlap with those of BT and are they likely to remain given a change of ownership?

If BT were to buy either Network what will be the response of OFCOM when it comes to regulation?

After 14 years not managing Mobile Infrastructure Assets does BT have the Management expertise needed to make a return on the Investment given the vast changes over that period?

On the basis of just these questions then the rational response is thanks for the opportunity but I think BT is better served NOT doing the deal. Those likely to benefit from any deal in the short term will be Investment Bankers, Lawyers and Accountants who will be able to charge large fees for the transaction.  In the medium term the beneficiaries are likely to be the rivals of BT.

If the deal were to work for BT it would have to be able to convince the Consumer that buying all your connectivity requirements from a single provider is worth paying a premium for rather than a discount. It would need to hire Executives capable of building and running Mobile Networks and then given them the space and power to do so rather than hamstringing them as a subsidiary of an Operating Unit. Whilst spending vast sums on Marketing and Engineering in the Mobile Business it would need to also do so in the Fixed Business or face Investigation and Sanctions by OFCOM and Politicians.  These challenges are greater than those faced by the Board in the Dot.com era when failure saw the sale of Cellnet.

Monday, September 29, 2014

Will Apple's iWatch be your friend?

Have been thinking about wearables since GSMA World in Barcelona this February and with the launch of Apple's iWatch I have started to formalise my opinions.

Setting aside the questions of does the device look suitable to take a place on my wrist the biggest question is what does an iWatch offer that I don't get from my handset?

The majority of Optimists tell me that if offers the opportunity to open a wide range of health benefits thanks to the App developer ecosytem taking the lifeloging data and improving what I do day to day.  I have looked at eHealth for quite some time and on the whole the processes that have been designed to make medicine better via technology have failed because of the silo nature of the stake holders. What has happened is that the increased data available has been used by the Insurance industry to raise premiums and or decline treatments.

Given what we have seen about breaches in data security by technology firms I do not hold out any hope that my data in anonymised given that the registration/purchasing functions used by Apple. Given that my working life requires long periods sat down and limited opportunities to exercise it would not be a surprise if the Actuary placed me in a high risk group and incentivised changes by financial penalties. Why should I make it easy for them by fitting a monitoring device that records how poor my time is used when it comes to health?

If I want to improve I think that I would invest in a Polar HRM system for the periods of the week when I am active and record the results in a Notebook rather than online rather than strap on an iWatch and give away health data.        

Wednesday, August 20, 2014

Time for the Mobile Networks to change their Business Model?

Here in the UK we are starting to see increased take up of 4G services and as a result the Mobile Networks are looking to tweak their relationship with the consumer.

Over the past few weeks I have received a number of text messages telling offering me various offers.    None of these offers are of any interest to me and I am now concerned that my Network Provider now feels that it is entitled to SPAM me.  I have "opted out" of such marketing however it seems to take 5 days for my request to be acted on.  Having opted out will my number now be sold to third parties to try there luck directly with me.

I have stopped taking calls from Private Numbers and those that are not in my address book because of nuisance callers prospecting for claims firms. It has resulted in less minutes of voice use.  I fear that the actions of my Mobile Network could now result in a situation that I start to look at a way to remove messaging.

I am paying at the top end of the tariff structure and think that such charge should entitle me to be left alone by my Mobile Network when it comes to marketing of third party offers.

They are attempting a number of new services, for example they now offer the chance to jump the que on calls to the contact centre for a fee.

What I would like is the ability to make a quality voice call that does not drop out and be capable of using the 4G data connection more than I am using WiFi.  Lets face it despite a relationship that is over ten years old my Mobile Network knows very little about me, it does not seem to be interested in retaining information I do share with them, so what makes them think that it is capable of selling things to me that are from others?

Thursday, June 12, 2014

European M&A rumours....

Here is the text from an email I got today....

Posted: 12 Jun 2014 02:35 AM PDT
Does anybody else find it a bit odd that today's media coverage of the failed merger talks between Orange and Bouygues Telecom pretty much all fail to mention the bigger industry tale that has been rattling around European markets all week - the talk of a EURO 90 billion merger between Deutsche Telekom and Orange.

I know this one has been knocking around for the last few days and a bit of an 'old chestnut' of a deal story. But this time I think there may be something in it, so it's worthwhile a mention on Betaville this morning.

Indeed, Gary Parkinson, the market reporter over at the The Times, tweeted on Monday he had been hearing rumours Deutsche Telekom is preparing a takeover bid for France's Orange. And on Tuesday Bryce Elder and Paul Murphy over FT Alphaville said on their execellent Markets Live show they have heard similar things but people close the situation have been playing the gossip down.

Well, I hear that several investment banks have lined up on either side of this potential EURO 90 billion combination, adding credence to the scuttlebutt.

Deutsche Bank, Bank of American Merrill Lynch and Citigroup are said to be working with Deutsche Telekom on the possible merger. Orange is believed to be working with Credit Suisse, Lazard and Credit Agricole.

Rothschild is likely to advise the French government, which owns 27pc of Orange, on any merger deal although the venerable corporate adviser was mandated to work with Bouygues Telecom on its EURO 6 billion sale talks to Orange, whose shares fell yesterday about 4pc.

Anyway, that's the extra detail I have managed to glean from my sources. The idea of Deutsche Telekom and Orange combining has been around for several years (the two companies have already merged their British businesses into EE) but my sources tell me things are now "hotting up".

In part, this is because Deutsche Telekom is close to securing a deal to sell its 67pc stake in T-Mobile USA to Sprint, which is controlled by Japan's Softbank. Here is a link to last week's report on the matter: http://uk.reuters.com/article/2014/06/05/us-tmobil-sprint-corp-idUKKBN0EF2DG20140605

Some of my sources reckon Deutsche Telekom will secure an upfront cash break fee payment of over EURO 1 billion from Sprint as it will take a long time for the US regulators to clear the sale.

Any deal between Deutsche Telekom and Orange is likely to see the German company pay for the French business using its own stock and a little bit of cash, claimed one source.

Bankers also tell me there is a political will to see both Deutsche Telekom and Orange come together to create a European telecoms champion that will be able to compete on a global stage. The German government owns 14.5pc of Deutsche Telekom and France has a 27pc stake in Orange.

I have to admit, though, I don't know whether this deal is just a glint in Deutsche Telekom's eye or whether talks - albeit informal, early or late stage - are "live". Market participants can make their own mind up what price Deutsche Telekom will/would have to pay for Orange

Deutsche Telekom and Orange both declined to comment although people close to the latter said there is "no project" being worked on.



The sender is a journalist.

I think that it is highly unlikely that any such deal will happen as the French are unlikely to accept the sale of Orange to the Germans.  If the deal was to happen I think that the EU regulators would have a serious look at what measures would be needed to make sure that wholesale access were fair and open to all as well as price regulations.  I cannot see where the New Co can make savings aimed at making the deal work medium to long term.

Whilst many Bankers are running models for consolidation I think that politics and personalities will make any such transactions limited to smaller markets or lesser players rather than former State Operators taking one another out.  That said I would welcome either DT or Orange buying BT.

Saturday, May 10, 2014

So where are we going in Mobile?

I look at the mobile ecosystem in Europe and fear that rather than making progress it is regressing, people are not innovating rather they are controlling costs in order to offer some kind of financial return for the shareholders.

Back in 2008 the former Strategy Director of Orange and I were telling everyone that if the Mobile Networks were to have a future as well as building out networks they needed to invest in improving Voice services or they would end up hollowing out the core business. Well I guess they were not listening.  My own family fear making telephone calls on the basis that they are too expensive regardless of the fact that I have told them that the tariff they are on means that they have unlimited to calls to fixed and mobile numbers in the UK. Asked to say how much a call costs they appear like a Government Politician asked the price of a pint of milk and a loaf of bread.

Meeting with others involved in Futurology and they have moved on from evangelising Apps to now push the rise of Wearables/Internet of Things/Big Data.  I am reminded of the Early Days of Imagineering at Orange  where they worked with Charles Church and Microsoft to build a House of the Future in Commuter Belt Hertfordshire.  People were asked to come and live in the house and then observed in an effort to understand what was possible and what was not.  The biggest issue I have with the Automation of the House is just how do we propose to install the technology into the millions of houses that we have already built because at 150-200K new homes a year it's going to take a very long time before the market is of significant scale without such.  I look outside my window at home and less than one in fifty houses where I live have a solar panel despite financial incentives. I know that I am due another round of renovations as it has been nearly ten years since I replaced the bathrooms and lighting. But I don't think that many others would say right now is the time to invest in enabling my house to be run by the Internet.

If I were to make the investment in enabling my house to be part of the next wave of technology what guarantee do I have that I have invested in the VHS solution rather than Betamax?  Worse still will my investment be that of MiniDisk proportions and in a few short months the novelty of the new has faded and I no longer wish to use Nest to control my heating system or who ever supplies my lighting system.  Worse still now will my connect fridge work if I persist in shopping at the Farmers Market rather than Whole Food Market? My artisan Butcher, Baker, Brewer and Cheese maker will not sully their products with smart tags and life is too short for me to inventory everything that comes into the house.

The fate of Nike's Fuel Band is something we can expect to see with Google's Glass and an number of current trendy fitness bands. Am I going to have another shoe box of tech junk that will only be fit for my own personal technology museum because they were once mass market and are now obsolete?

Perhaps now is the moment for the Mobile Networks to take greater control of there assets and whilst installing 4G technologies also adapt the API's that are used by Internet Firms to enable Apps and Internet of Things?  In doing so they can once again price the value of connectivity this time using terms such as Quality of Service, Security and Enhanced Bandwidth to get extra payment above that of basic utility prices.

We are at the very early stages of 4G in Europe, it will be another 2-3 years before the service is deployed to cover the majority of the Landmass in most countries and then the speeds available will slowly be increased and new services/businesses will come to the fore.  I do not expect that the companies that will dominate 4G are know yet just as Apple, Android and Apps were not on the tip of everyones tongue in 2003.        

Sunday, February 23, 2014

GSMA World 2014 in Barcelona, time to end the show?

The global get together that is GSMA World rolls into Barcelona this week and I am left with the feeling that as with Telecoms World before it no longer fits a purpose. At the hight of the Dot.Com bubble Telecoms World was THE trade show for the fixed telecoms world, $1M+ was spent by firms on the production of stands; it was such a success that the ITU build a new space for the next show, unfortunately that new space had tumble weed rolling through it and the ITU has become a zombie.

In past years GSMA World was an important conference that happened to have an exhibition attached.  It was something that you had to attend if you wanted to achieve or be recognised in the Mobile Industry. Over the course of a week it was possible to meet all the important players in the industry and get a real feel for what was going to happen for the coming year. That is no longer the case.

At this years conference the GSMA has decided that the Keynote speakers should be Facebook and IBM rather than the CEOs of Vodafone, Ericsson or Huawei.  In the past we have listened to the future as outlined by charismatic leaders and disruptors such as Richard Branson and Hans Snook who were upstaged by the likes of Douglas Adams. This year the line up is such that many very senior executives whilst in town will not be at the show; rather they will stay close to the Arts Hotel to network and lobby.

As for the exhibition, well the security will rival that of the airport and it is of a size to rival CeBIT next month in Hanover.  It is unlikely that we are going to see anything of mind blowing innovation or design because now they are revealed elsewhere at times more suited to consumer demand and/or the news cycle.

The cost and the scale of GSMA World Congress does mean that a number of those on the edge of the mobile ecosystem will not be in attendance. I have a number of conference calls after the show finishes with people who will not be in attendance but what to confirm that in missing Barcelona they have not missed out. If they are right even fewer decision makers will attend in 2015 and the were are faced with a downward spiral rather than an upward curve.

The media reporting on World Congress are unlikely to report that the Emperor stands before them unclothed as they enjoy a comfortable time with plenty of chances to party on a PR firms credit card. So whilst the SWAG on offer has declined the good times roll providing that you work for the right media.  A number of Industry Analysts are not attending as they have not been able to find sponsors willing to pick up the tab and so will be stuck at home.

The GSMA missed the fact that Mobile's focus had shifted from Europe to West Cost America with the rise of 3G. As 4G starts to become mainstream in the developed world and 3G is deployed on a Global basis it needs to become relevant again.  The Executives leading the day to day operations have to understand that they are working for a trade association that is about the Mobile Networks, Equipment Manufactures and those that support them, it is not about the software companies that are marketing to consumers whilst making little or no investment in the infrastructure.

I would be happy to see Facebook and WhatsAp CEO's booed and hackled at their keynotes rather than applauded as this would demonstrate that the GSMA was still relevant and represented it's members.    

Monday, December 16, 2013

Will the real BT stand up?

Over the weekend I read three stories about BT which paint a confused view of just what it's future might be. On Saturday the Guardian reported that thanks to BT TV complaints have shoot up. The Yesterday's Sunday Times had two stories in the Business Section about the return of BT Mobile and a feature on NEW CEO Gavin Patterson's £2bn bet on sports TV.

If you read on paper you get the view that BT's retail strategy is in need of a major review. The customers are unhappy with the failings of not just it's TV product but also it's Broadband product. The only provider that gets more complaints for it's Broadband is EE.

Read the Sunday Times and all is good for BT it's about to get back in the Mobile Phone business after leaving in 2001 and BT TV has seen 3M on Virgin and Sky take the service. Then a full page feature on new CEO Gavin Paterson and his £2bn bet on sports TV is a bold gamble that aims to grow the business after a period of cost cutting. He will use a Quad Play offer to drive up incomes having bought some 4G spectrum and struct an MVNO deal with EE.

The problem is that Simon Duke in the Sunday Times does not seem to understand that BT has had MVNO agreements with O2 and Vodafone ever since it sold of it's mobile arm after over paying for 3G spectrum in 2000. He also does not seem to understand that since 2008 BT has failed to invest the money need to provide the long term upgrade in super-fast fibre to the curb rather than cabinet just as it failed to match European spending in ADSL deployment ten years previously.

When you start to understand that last week OFCOM reported that the UK has the lowest consumer prices for Mobile services in Europe you start to ask it's not just Duke that fails to understand the realities of a very competitive telecoms market but BT also.  For too long the Company thinks that one of its prime roles is to defend itself against the regulator rather than invest in it's Network so that it survives long term.