Is it possible to fix BT?

Ofcom has started another review into how BT effects the UK telecoms market, so 10 years after the first review. At the same time the CMA are looking at it's plans to buy EE.

This regulatory overview gives a chance to review how BT operates in the UK and what could be done to improve things.  Since the Privatisation of British Telecom the market has failed to offer an effective competitor rather it has seen a race to the bottom.  

Consumers in the UK have been very poorly served when it comes to keep up with Continental rivals when it comes to Infrastructure.  Whilst the cable industry did attempt to build out an alternative network it failed to do so with a sustainable business model and so we are faced with the situation that more households are not pasted by Virgin Media than are. The provider of the last resort is thus BT and as such is highly regulated with an obligation to wholesale network access to rivals.

Thirty years ago Britain got its first mobile networks, one of those had access to enough rooftops to build infrastructure needed up until 2000 thanks to it's only property portfolio and captive business accounts.  The other was Vodafone, a small start up based at the end of the Thames Valley with a sleepy parent focused on the defence industry.  Yet because BT focused on doing things that impeded its rival rather than do what was needed they failed so sceptically that they were forced to divest the Mobile business.

When it comes to the Broadband business it has repeated the same mistakes, rather than invest in the Network so that it was the best possible it has played games with rivals seeking to do just enough to avoid sanction.  We thus find ourselves in the UK operating behind the curve when it comes to digital services because of slow speeds and over capacity.

The last review took Ofcom two years to complete and saw the creation of Openreach as an effective remedy. Hindsight has proved that the actions have not worked and BT rivals are now asking for the business to be spun off from it's parent in an effort to improve capital investment. Such a option will not solve the investment lag rather it will make it worse.

I saw recent analysis of the performance of BT shares over the last fifteen years which highlight that the Management had managed to offer a negative return of some 20+% one of the worse performance with the FTSE 100. Thus shareholder seem just as ineffectual as regulators to force the Executives to run the business.    

GSMA Mobile World Congress 2015

So today the Mobile World Congress officially opened in Barcelona and I fear that it's days are numbered as an event because the Circus that is the exhibition is now too big and the Conference of little relevance to the Mobile Network Operators who make up the GSMA. For many MWC15 started on Sunday with a number of handset makers holding Press Events to launch new devices.

The GSMA in an effort to raise funds has grown the exhibition event to a size that it is no longer controllable.  Yet it has failed to attract the likes of Apple to attend either to exhibitor or talk at the conference. Every year the GSMA attempts to set the agenda and fails, it leaves me feeling disappointed and questions just what datapoints they select in an effort to predict the future.  This year they are focusing on the Internet of Things which I have to ask just what does that have to do with Mobile Networks over the next 5 years?

Just before Telecoms World collapsed we saw Internet Firms descend on Switzerland spending $1M+ on stands getting all the attention rather than presentations on the Conference stage.  I fear that we are witnessing the same with MWC.  At the end of this week I am sure that the GSMA will announce ever more visitors attended, more press attended and the whole thing was a success.  I think I will say that the event has become somewhat like a Conservative Party Conference all be it on a large scale. We took a trip to the seaside to walk around a massive soulless space and feel that we are close to the powerful only to discover that we have no influence let alone power to shape the future!  

So BT have finalised a deal for EE

We woke this morning to the news that BT had agreed terms to acquire EE.  I have to say that if feels that I am in some strange fantasy world rather than one that understands the massive risk such a deal is.

Those that make a living as public analysts have all been very quick to jump on the bandwagon that this is wonderful news.  I feel somewhat differently.

If I were a shareholder in Orange I have to ask just how owning shares in BT is going to fund purchases in France aimed at consolidation?  It is also difficult to see how DT can say it got a fair price for finally exiting the UK mobile market (they bought One-2-One for £8.4bn).

But lets look at just what BT have bought and how they are unlikely to be able to execute an strategy that offers a return on the investment.

BT back in the retail game.

Part of the "prize" for BT is the fact that they will take over the stores of EE and thus have a presence on the High Street through which they can upsell other services.  BT used to have retail stores that they closed because they could not make them work.  I do not think that they have significantly changed so that they can offer a presence where you can talk people into Quad play services. If they can sell Quad play then it will be on the basis of discounting rather than quality.  

What can BT do will all the 4G Spectrum?

In the 4G auctions BT purchased spectrum that it was going to used for fixed mobile services and now has spectrum refarmed and purchase by EE.  The regulator will have demands about forfeiture of some of the Spectrum. Whilst divisions other than BT Retail will have requirements for Mobile Spectrum of its own, can these be met by the new holding?

BT's ability to invest in Fibre

If BT can find the money to buy a Mobile asset then why can't it find the money to better roll out Fibre Broadband, is likely to be the simplistic view of politicians.  Thus demand that BT deals speedily in building out Fibre to the 50% of households not covered by Virgin's footprint will increase.  Alongside the calls for faster upgrades to the Fibre estate will be demands that they wholesale access prices fall.

Talent blackhole when it comes to Mobile

BT does not have the Executive experience required to manage a Mobile Operation and the Management at EE is unlikely to want to work for BT.  This means that once the deal closes they will face a mass exit of know how just at a time that they need to up skill. If they wish to stop that then they will be over paying, if they don't then they will discover just how complex managing the build and maintenance of a Mobile Network is.

Everything just got a lot more expensive for BT

Anyone with something to sell to BT has just seen that they are happy to pay top prices.  So in order to close any significant move they will discover that the price has just risen by 15-20%.  If they can spend £12.5bn for EE they must have the money for ...

BT Executives are in my experience very far from reality.  They might feel that they are offering the consumer an enhanced product range that they should be happy to pay for.  The reality is that for the last fifteen years telecommunications has been a commodity that the user demands at an ever decreasing price.  Look at the UK retail space and you see a blood bath, experienced hands like Tesco, M&S and Topshop are hurting an BT thinks that they can be successful. BT adverts for Broadband services may win awards and get people talking but they do not seem to get people signing up for service.  If you pay out £12.5bn how long can you offer BT Sport free of charge to your Consumers? What will the price be and how many will pay it?

Rather than telling the CEO and Chairman that they have struck an excellent deal if I would a significant shareholder I would be selling off my holding as it is unlikely that I will see an increase in dividends from helping Germany and France exit the UK Mobile market.

More thoughts on the BT purchase of EE

Reading today's Telegraph I start to see analysis that BT returning to the Mobile Market might not be a great idea. Whilst this is a start I don't think that it highlights the problems such a deal presents to BT.

The investment that in buying EE BT is making is 3 times that they have made in Superfast Broadband AND Sport.  This is just the table stakes, having joined the Mobile poker table they will have to double down if they are to fulfil the terms of the 4G Spectrum Licience.  This is at a time when the sector is shrinking rather than growing.

The way that EE was formed has seen the culture of the business very much free of Civil Servant style management, something very different to BT.  Thus in buying a Mobile Network will the Executives be brave and allow it to stand alone, would they be allowed to by the Regulators?  If they place the mobile unit as a subsidiary of BT Retail I predict that many of the members of staff that make the business work will exit in frustration if they can be persuaded to join in the first place. Most are likely to seek redundancy before the transaction closes.

In Gavin Patterson BT have a CEO who is all about Marketing with little understanding of Engineering.  This could well be a problem when it comes to developing products that utilise the new Mobile Asset.  At this moment in time BT are building three 4G core networks for use by customers in the UK thanks to the structure placed upon it by Regulation. These networks will be used to deliver different products none of which have a proven demand.  The last time BT owned both fixed and mobile assets it saw potential for converged mobile phones and invested heavily in projects such as the BT Bluephone which were commercial flops. I fear that they did not learn for such follies and will once again squander millions that could be spent upgrading fixed networks or boosting the income of sportsmen and women.  

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.

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.        

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?

European M&A rumours....

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

A German Orange

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.

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.        

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.    

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.  

You lost the love....

Hey Mobile Network Operator just what is going on. We have been together for some years now and whilst my love of mobile has grown stronger you have lost the love for me you once had. When we first started you were happy and helpful, giving and gracious. Nothing was too much for you, my calls were picked up by a human quickly and presents were given. Today it takes an age to get through the machine before a grumpy despondent surly conversation leaves me thinking why did I call because you don't love me any more.

I pay my bill on time, I accept you declining coverage when it comes to a phone call and the fact that when ever possible you hand me off to a wifi network. I know that the present of a new shinny device once a year was too much to ask and can now wait two years or go out and buy a replacement device myself.

Yet you now seem to think that the transaction should be something that is best undertaken at lowest cost despite the fact that I still manage to spend £100+ when others around are giving you far less each month. I know that at this time my leaving to join another makes no sense as you are working to an Industry Standard but it cannot be sustained soon I could become a nomad and operate with just wifi and tablet. I am not someone who is looking for the lowest transaction cost but rather the service that my loyalty and spend justify when seen against the average. Keeping me is about more than a calculation of margin over Subscriber Acquisition Cost it is about your Brand Values meaning something.

Looking at Twitter and chatting with mates it seems that I am not the only one that feels that you have lost the love for the consumer. It is not that our standards are raised rather that yours have dropped. Soon I will be embarrassed to say that I work in the Mobile Industry and can no longer recommend my supplier to those looking to change as at this time the reasons to change are difficult to see.

Please roll back the changes, stop trying to be a faceless heartless corporate and show some empathy not just for me but for each of the contract customers once more. You might just be rewarded yourself with growing revenues and fewer contract cancelations.         

It's not about the technology....

A friend on Twitter pointed me at this article on how Blackberry could have avoided becoming a footnote in business study classes looking at the Kodak Moment.

I am surprised that someone who works for an Advertising Agency fails to point to the obvious factors in Apples success.  When none of the others were directly advertising to the consumer on TV, Apple were.  When few were advertising handsets in the Press Apple did. Others at that time had stopped advertising above the line because they were selling products via Partners those partners were the Mobile Operators who used the coop funds to pay for in store and brochures which lets face it looks old and out of date compared to Apple.

NOTHING on a iPhone was new to the mobile industry what was fresh was the promotion and development of the aspirational quality of the handset.  It has been helped by the "exclusivity" model used by Apple to "limit" mass market appeal. This fashion label allowed Apple for a time to lead the Smartphone market but was quickly overtaken in terms of volume by Samsung who used it's Far East cooperation ethos to appeal to those that where anti-Apple to grab the market.

The big question is will my Grandchildren read that Apple was just another Levis Strauss in that it helped establish a sector, almost died, had a return to fashion and then a slow but inevitable decline?

An act of stupidity by a desperate Prime Minister

I picked up my morning paper and almost tore it in two reading the latest stupid PR stunt from David Cameron. When Ed Miliband made his Conference Speech this September we were told that price controls could not work and were wrong. Yet with his back to the wall Dave has decided that all utility companies need to be told that his government will not accept price rises in the run up to the 2015 election.

This is an act akin to King Canute except the Prime Minister does not understand that he cannot turn back the tide of price increases.

An analysis of the players in the market will show that many are subsidiaries of  overseas businesses rather than British and thus have little loyalty to local politicians. They are in the majority investing in significant infrastructure programs that mean that rather than pay taxes they have losses to cover.

What the Prime Minister should be doing via the offices of the Department of Culture Media and Sport and Ofcom is making sure that telecoms networks are able to deploy high speed broadband to the majority of the population in the majority of places. It is with such a network that the economy will grow and income rise at such a level that people do not feel price rises.

Questions Raised

Over the last few months my work projects have seen some recurring observations develop into points of interest.  I am not sure where the answers are, I am not even sure that people are making the same observations let alone crafting solutions. I thought that I would hang a few of the observations out and see if people want to respond.

So if I am using multiple devices, why can't I share "history" across them? I don't want just the synchronise my end points rather I want to map the footsteps that I travelled in getting from A to B.  Thus this is not a synchronisation problem rather it is about replication. Who can I trust to store and retrieve these journeys?

If it is about the software are we getting to a point when the hardware doesn't need to be replaced so frequently? With hardware now priced a $600+ for a premium device why can't I get it built to order and so specify what I want? If that happens then the Mobile Networks need to change their business model as they are no longer financing the device rather they are facilitating connectivity!

If you look back at the history of 3G technology you discover what we saw at launch phase quickly changed as customers declined to take the product served up by the Mobile Networks.  It was only once 3G had become established that Apple entered the market and disrupted the whole industry. The current generation was launch two years ago in two years time it should be established enough for someone to enter the market and disrupt it once again. The speed and quality of the data connection should make for a number of interesting possibilities, the loss of trust in established players and the advertising based funding model for the Internet means that for someone a massive opportunity awaits.    

So will we be wearing our next mobile phone?

The excitement over the summer has been about wearables when it comes to mobile technology.  Will our next device be in the form of smartglasses or smartwatches or even a smartsuit?

To be honest having got into some of the futurology that saw mobile phones becoming just a piece of jewellery in the form of a single earring I have a bad track record. I thought that we would be living in smart houses that sensed everything that went on and the handset would become the ultimate remote controller. I saw the mobile network morphing into a service provider that would be trusted to hold and manage all your personal data.  To be honest these were forecasts back in 20th century and Google and Facebook had not become the cornerstones of many lives and we did not thing the NSA would read all our data.  The Mobile Network was going to become everyones personal assistant and we would all have exemplary concierge levels of service.

What I do think that is that we will not live with a single connected device rather we will have a number of devices which will have a personal network connection to a modem that offers highspeed broadband and voice services. Some people who are happy with "popular" music can live with Spotify and YouTube whilst others will want a music device that plays back their musical collection. The same can be said for e-reader, camera, media consumption screen. Some are happy to map their run using an app on a phone whilst others have a more detailed record tanks to a Garmin Watch, in future the Watch will connect to the web via your personal modem.

As Augmented Reality develops we might expect the specialist glasses to become contact lenses or a protection device as seen with fighter pilots head up displays.

As healthcare gets involved we could start to see a number of devices that are warn to sense vital signs and mobility.  We can expect to these developed for the Defence and Old Aged markets before they become mainstream.  We might also be able to see tags used to enable smart seats, beds or toilets in connecting them to a mobile device and using proximity it will allow differentiation of different people within a building. These devices are likely to be manufactured thanks to 3D printing development rather than Samsung/Apple/Google design labs and Chinese factories.

The big issue will be that the deployment of smart buildings and thus smart cities is going to be the ability to get political buy in and consumer uptake.  Very many of the senior executives I meet alongside senior politicians and very rich individuals do not carry a phone and have no wish to do so. Thus in areas of New York, Switzerland, London, Paris and Berlin now can to build the infrastructure needed to mesh new services together?  

I think that we will see a number of prototypes come to market when it comes to wearables most of which will fail because we would be embarrassed to wear them and be seen as some form of cyborg. If the wearables could be made to look like "normal" products then fear that you are being "stalked" would force social pressure to stop use. Would you want someone with a wearable to share the changing facilities with you at your gym?

My advice to Mobile Networks invest in building the fastest best quality network, develop tools to manage ID, offer storage and form federations to innovate service fail to that and expect to fall.

Some thoughts about the recent developments in the handset space

Well the summer has been an eventful one for Handset Manufacturers.  We have had the expected refresh of the benchmark for smartphone from Apple and whilst they have managed to break sales records thanks to clever marketing and management of supply they didn't in my opinion retake leadership of the sector. Samsung continues to drive ahead with the expansion of the Galaxy brand thanks to a refresh of the Note and the introduction of a wristwatch form factor as remote control/2nd Screen. The car crashes have been spectacular with Nokia exiting the market via a fire sale to Microsoft quickly bettered by the offer for BlackBerry by Fairfax. Have not started analysis of the performance of HTC, LG, Sony who seem to have become casualties in the OS wars of recent years not server enough to kill them but bad enough to make them marginal players.

On the Apple front I was pleased to see just like others in the fashion industry they have given up trying to make size zero yet slimmer. I just hope that they and others will take note of the reviews of the two new iPhones side by side that report the 5c feels better in the hand and start adding curves. But please don't go over the top with a Kim Kardashian inspired monster, if that were to happen it would be on a par with the Pink Motorola V3 razr and signal that innovation had died and marketing was going to kill the business. On a negative front the changes seen with iO7 seem to be cosmetic rather than a genuine shift that takes into account that a 4G handset is a very different device to one that spends most of its time on Wifi. Perhaps next year the designers will rock up with a new OS that moves the world forward rather than paint lipstick on a fading star?

Samsung is a company that always surprises me when ever I interface with it. It's old school centralised command and control structure and long term planning seems inflexible yet surprises in getting the market right.  Unlike any of the other Handset Guys it still seems to value it's channel partners and has strong relationships with the mobile networks who after all will sell the majority of its handsets. Yet design by committee does seem to be throwing up some strange selections. The Mobile Phone business has spent twenty years telling people that don't need to wear a device on the wrist to tell the time and yet they come out and launch such a device.  Looking at the functionality I would have hoped that they would have followed Polar and combined fitness applications alongside the ability to be a second screen for a tablet/phone.

What can I say about Nokia without sounding like Tomi Ahonen? I would point out that when Nokia overtook Motorola to become Number 1 in the world it did so working with the Network Operators and up until the arrival of Elop maintained strong links.  The business was not in bad shape until it started listening to those say they need to get like Apple and so they put all their eggs in the Microsoft basket.

Until last week I was sure that Nokia would be the Business School case study in the decline and fall of mobile phone businesses but then we had BlackBerry!  Just WOW when will the lawyers start filing claims against the Board for mismanagement? When will the regulators start asking questions about financial mismanagement? When will the stockholders realise that Fairfax are the undertakers rather than saviours for the business and the body has greater value to others and seek better offers?  I don't think that we have heard the last on BlackBerry and would not be surprised to see Microsoft own the business once the dust has settled.

I think that we need a decent competitor to Google when it comes to Mobile OS and Apple is not it because it is focused just on the high end. I stronger better Microsoft that uses features from BES/BIS and can manufacture low cost devices that are sold via partners is just the kind of business that would scare the Californian Tech set and in doing so might force them to innovate and develop for a world based on 4G connectivity rather than the patch work networks we see today.

As we move towards 4G what might we expect?

Futurology is a difficult thing, it is easy to get trends right but very difficult to predict just when something might happen and how big it will be.

So here in the UK we have finally sold the spectrum for the launch of 4G services and can expect rivals to EE to start launching services in the Summer.  Will I be standing in line as a fan boy on launch date waiting for an upgrade?

No I don't think it will be an upgrade rather I think that my will be adding a MiFi device to my account so that I can make use of the faster data connection and the wifi connections on my Laptop, Tablet, MP3 player and e-reader when I am mobile and in an area without hotspot action.  Having been at the launch of 2G, 2.5G, 3G and 3.5G services I am experienced enough to know that what the Mobile Operator wants to sell me may not equate to what I need and will not be priced in a manor that encourages use.  Just look at the "smartphones" that were available at the start of 3G against the current suite of Android, Windows Mobile, Blackberry or iPhone devises. Most people got their first experience via a dongle that connected a laptop to 3G than handsets, why would 4G be any different?

What I do expect to see is more innovation from the Networks when it comes to pricing.  The thing about 4G is that it is all about faster data connections and thus you do not multiple accounts/devices rather a single account that allows you to connect as many devices as possible to consume a set amount of data.  I do not expect the present simple structure to work, the first issue is that user has no idea of now much they have use/have left and adding multiple accounts will only make it harder to understand.  I expect that we might see something that reflects the number of devices and times that you expect to use the service.  A Family plan that allows say up to 20 devices use a single connection point mainly before 8:30 and after 16:30 Monday to Friday and at Weekends and a Business Plan that sees connectivity take place between 08:00 and 19:00 and has a higher speed and capacity than the Family plan.

I hope that the introduction of 4G will see innovation from the Networks that see them working with developers rather than against them to use things such as Augmented Reality and Big Data to improve user experiences. I hope that rather than have a service forced upon me that is backed by advertising I have the option to buy a subscription that means I can remove adverts.

A bad day for Britain's Mobile Ecosystem

Today at the Science Museum Everything Everywhere entertained the dumb and witless of the British Press to its "plans" for the launch of LTE services in the UK.  Next month they will give the opportunity to a few to have a service that is so far away from 4G standards that it's laughable. EE are offering the consumer the chance to experience a Mobile Broadband experience of up to 8Mbps which is slower than some with HSDP+ devices on Vodafone are capable of getting.

This launch has every opportunity of being an even bigger disappointment that 3G was in 2003 when coverage was very poor and devices were not best suited for the improvements offered by the new technology.  The real benefit of 4G is not in services to "smartphones" rather it will be improved connectivity for laptops and tablets or it will be delivering highspeed broadband to rural areas. Everything Everywhere has no intention of offering such services any time soon.  Perhaps that is because at present it has problems giving 3G services to these markets.

The UK Government has so far managed to fudge and fiddle the sale of 4G spectrum and hopes that in allowing Everything Everywhere rights to run a second rate service they can force Stakeholders to participate in a flawed sales rather than seek judicial review and see yet more delays.  I would rather have a delayed launch of 4G that gives Britain a significant uplift that enables it to compete with rivals that a glitzy marketing launch of an inferior service that history will see as willy waving - all be it with a shinny new iPhone.

Just how stupid were the Conservative Government to privatise British Telecom?

In 1984 I left school with a few A levels and started looking for a job rather than go to University. At the same time Margaret Thatcher's Government were in the process of Privatising the Nationalised Industries and the floated British Telecom.  We were told that the new company would be more efficient and the Economy would benefit from a better run business.  "We want BT to have the complete freedom that a private company has.  Only in this way can the needs of the country and of BT be met.  The Bill creates freedom from Treasury and ministerial control.  It also gives freedom to BT to grow, to operate overseas, and to make acquisitions... the market is growing so quickly that BT can expand only by becoming a free, independent company" (Kenneth Baker, Minister for Industry and Information Technology, 29 November 1982).

"If we were to continue with the old cosy relationship of a public utility with an exclusive privilege, having its accredited manufacturers continuously supplying equipment to the same specifications, this country would become a telecommunications backwater" (John Butcher, Under Secretary of State for Industry, 15 February 1983).

So lets wide the clock forward to 2012 and look at what the UK needs in terms of telecoms products and how BT are able to service those needs.  Today in Parliament the Prime Minister said the he wanted hi Secretary of State for Culture to build the High Speed Broadband the country needs to get the Economy growing.  I almost chocked on my coffee, just how was she going to incentivise a Private Company to invest in infrastructure at a rate where it was likely to lose money?  The Chairman and Chief Executive of BT can rightly say that regardless of what the Government wants they answer to the shareholders who want a return of their investment.

Back at the time of the first Internet bubble in the late 1990s Britain was a laggard when it came to Broadband services and speed.  The issue was that BT had not invested in new service because the regulator and the shareholders were acting as an anchor.  In other parts of Europe State Owned Monopolies had been able to get a march on the UK with the deployment of ADSL services.  In an effort to remedy this the Regulator decided that BT would have to give access to it's exchanges for rivals to install equipment and hopefully introduce competition that would force BT to launch faster services to maintain customers.  Rather than achieve what they hoped for the Regulator they found the BT went slower holding back the introduction of faster services and future Upgrades to High Speed Broadband have been even slower.

Over the past year I have watched the deployment of High Speed Fibre to my local exchange in West Hertfordshire.  The project was first expected to be completed in January 2012.  The Exchange did no go live until July 2012 a delay of six months. The service available to most households is not the Infinity product advertised on the television but rather a service a quarter of that speed.  The reason is that the suburban town that I live in has too much copper buried in the ground rather than running through ducts.  This is expensive to replace and only seems to be done by BTOpenreach if the cable has been stollen.  Thus the market does not seem to be working for the benefit of the consumer or the Economy because BT does not have a financial incentive to maintain the best possible network.

In the last financial year BT has generated some £2.5Bn in free cashflow, it has also paid a dividend to shareholders.  These funds could have been used it the Utility was still in State ownership to invest in the deployment of Highspeed Broadband across the whole of the UK. The Privatised BT has not become free and it has not increased the number of suppliers used to build and maintain it's Network rather it has decreased them as they seek to reduce costs.  The cost cutting measures has also seen less money spent on training and development of Engineers the almost total closure of it's R&D facilities and consumers suffering poor quality service. (NB Once I have an update on my current service complaint to the Chairman's Office at BT I will write another post on just how they are failing to deliver)

I look across at France Telecom, Deutsch Telecom and KPN and think that  Conservative Prime Ministers have very little understand of the strategic importance of world leading communications networks.  When I visit somewhere such as Korea and Japan and see what they have achieved with Super Fast Broadband delivered via a form of planned economy and I wish that my Parents had not returned from the Far East in 1976 and I worked there.