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Be careful what you wish for

On Monday, Mark Zuckerberg will stand in front of the operator community that has fought to stem the negative impact of OTT messaging services on their revenue. And he will deliver a keynote just days after whacking a staggering $ 16bn (rising to $ 19bn) on the table for one of the world’s most popular OTT messaging services, WhatsApp. The Informer would not be surprised if his keynote was a simple: “Take that, suckers.”

On the face of it, Facebook acquiring WhatsApp is arguably a simple case of one OTT service provider acquiring another. The principle that popular OTT services drive data usage and, in turn, generate revenue from data services for operators remains true too. However, this week we’ve seen concerted efforts from the carrier community to provide consumers with their default mobile messaging system and Facebook appears to have its eyes on that very same opportunity.

Folks at the GSMA, the trade body that organises MWC, tell the Informer that they had tried for several years to lure Facebook into offering a spokesperson to make a keynote at the show. Allegedly, Facebook wanted to hold off and only make the keynote when the time is ready and felt that the only suitable person for the job is Zuckerberg himself. The GSMA may now well be wishing that they had never sent this particular friend request.

The likelihood is that Zuckerberg will use his platform at the show to stress the importance of OTT and operator partnerships. Spokespeople from OTT firms have made several keynotes at trade shows around the world aimed at the operator community, voicing the potential that partnerships between them could bring. However, announcements from operators about revenue sharing deals with social networking or OTT messaging services remain thin on the ground.

OTT players know that operators want to be told that there is an opportunity to generate revenue from messaging services over their networks, just like they enjoyed in the days where they could charge several pennies for each SMS sent over it. However, in their own board meetings, OTT firms will surely be more focused on protecting any revenue they do see, rather than on how they could share it with third parties – and who could blame them?

As such, the battle to monetise messaging services is a theme that The Informer expects to see become a focus for many firms over the coming years. This week, Deutsche Telekom’s Kobus Smit, head of voice and messaging, who is also RCE chair at trade body the GSMA, told Telecoms.com of the operator’s plans to make operator RCS messaging services the default form of messaging for consumers all over the world.

He did so as Deutsche Telekom and Orange both announced that they had connected to a hub to make their RCS services interoperable within their own regional subsidiaries, with each other and with other operators around the world.

According to the cloud communications firm that provides the hub, Jibe Mobile, interconnection of RCS services between operators around the world is fundamental to connecting subscribers. If operators intend to provide services such as video call, group chat and video, photo and file sharing, they will have to collaborate. RCS messaging services simply will not take off if operators are restricted to providing them within their own network, because services such as WhatsApp don’t have those same limitations. But according to Smit, RCS “is and isn’t competing with OTTs”.

“It is in the sense that there are comparable services and features and at face value, the user can choose one or the other,” he said. However, his hope is that before long, operator RCS will overtake OTT messaging services.

“In terms of positioning, however, we expect RCS to be positioned similar to where SMS and voice is – the default communication method – that is the positioning we are going for and is also why we’re delivering it in the way we are.”

He went on to explain how DT intends to monetise RCS services. The RCS service that it has already launched in Germany allows all subscribers who use an SMS or data bundle in their package to use RCS services unlimited for free, without it coming out of their data usage.

“In the short term, there’s no additional new revenue being provided by RCS. In that context, RCS is a defensive move because it preserves existing revenue.  In the longer term, once we’ve established the ecosystem and the key USP that we have – ubiquity; the fact that the service is in every device, and you don’t have to be invited or download anything – once we’ve achieved a significant portion of that ubiquity, there is massive value that can be leveraged for third parties in terms of providing APIs and access to these features on the network – that is also a big revenue potential but to get there you have to get the basics right – get the service out there and get it being used.”

Orange also announced that its communications app Libon is  becoming more open and will become the group’s consumer app for RCS. According to the operator group, Libon’s Open Chat technology means that chatting and sharing video, audio, photos and files is no longer restricted to a specific app or platform. Libon users are now able to instant message with their contacts regardless of the messaging service they use, and even if they use none at all, as long as they are using an HTML5 browser.

Over in Canada, the country’s 700MHz auction generated a lot of interest and a lot of revenue too.  The Canadian government raised a sizeable total of C$ 5.27bn during the auction with big spender Rogers Communications laying out a whopping C$ 3.29bn (US$ 2.98bn) on two 12MHz blocks of paired lower 700MHz band spectrum licences. Rival Telus also splashed its cash, shelling out C$ 1.14bn on spectrum licences equating to a national average of 16.6MHz in the band. Bell also spent C$ 566m in the auction acquiring 31 licences. The licences issued will remain valid for 20 years.

Rogers was confident of extending its market leadership in Canada. It already has 9.46 million subscribers as of September 2013, according to Informa’s WCIS, while Telus has 7.71 million subscribers, putting it virtually neck and neck with Bell Wireless, which has 7.74 million.

“Not all 700MHz spectrum in the auction was the same; we secured the beachfront property we wanted,” said Guy Laurence, president and CEO at Rogers. He added that the spectrum the operator acquired places it in a strong position to deliver the “ultimate video experience” to its subscribers

Telus said that its newly-acquired spectrum will enable it to deliver improved LTE coverage to customers. It added that the 700MHz band of spectrum is valuable due to its ability to penetrate into buildings and propagate over long distances.

Meanwhile, South Korean LTE pioneer SK Telecom announced plans this week to extend its LTE and LTE-A networks by building additional base stations using the 1.8GHz band by the end of this year. The operator claims that the network improvement will result in subscribers experiencing mobile broadband speeds of 150Mbps nationwide. The operator also announced plans to begin building base stations for LTE in the 2.1GHz band in the second quarter of this year and will commercially roll out the network when supporting handsets come to the market.

Staying with the Far East, Chinese operator China Mobile announced it has deployed a self-organising small cell microwave backhaul system in its LTE network to provide improved coverage and capacity to subscribers in densely populated urban areas.

The world’s largest operator with 747 million subscribers as of September 2013, according to Informa’s WCIS service, launched its TD-LTE network in December last year and said it will continue rolling the network out across the country to reach more than half a  million TD-LTE base stations by the end of this year. The operator called on small cells solutions vendor Cambridge Communication Systems (CCS) to provide the equipment for the deployment.

Over in India, operator group Bharti Airtel revealed plans to acquire regional player Loop Mobile. The group said that Loop Mobile’s three million subscribers and 2,500 cell sites in Mumbai will add to its own four million subscriber base and its 2G and 3G network with 4,000 cell sites in the city. The group did not disclose the amount it will pay for Loop, but reports in India suggest it could be in the region of INR7bn ($ 1.12bn).

Anubhuti Belgaonkar, senior analyst at Informa Telecoms and Media, believes that the acquisition will be given the green light by the authorities, who have recently eased the rules surrounding M&A activity in the country’s telecoms sector.

“According to the new M&A rules, an operator’s market share is decided based only on the service area in which it is looking to acquire,” she said. “The government also recently increased the limit of market share an operator can have after acquiring another, so Airtel and Loop should be okay.”

She also stated her belief that we can expect to see more M&A in India in the near future:  “I think there will be more in-market consolidation, particularly for smaller players, like Loop Mobile, that do not have nationwide presence. There are rumours cuirculating in India that Vodafone is looking to acquire [Indian conglomerate] Tata’s mobile operator business, so I think we will see more M&A activity in the market.”

Two Smart City initiatives were also announced this week. Deutsche Telekom announced a pilot Smart City project in the Italian city of Pisa. The project sees the operator integrating a number of parking spaces in Piazza Carrara, in the city centre, within a sensor-based parking management system.

The operator said it will also analyse traffic data to optimise the flow of traffic. It will showcase the technology and other M2M solutions for Smart Cities, such as remote controlled streetlights and technology for connected stadiums, at Mobile World Congress in Barcelona next week.

US operator AT&T also teamed up with enterprise IT giant IBM to co-develop cloud and analytics solutions that ingest data from M2M sensors embedded in civil and energy infrastructure in cities. The companies said they will combine analytics, cloud and security technologies in a bid to capitalise on the burgeoning Internet of Things movement.

Their partnership will initially focus on co-developing solutions for city governments and midsize utilities, which will gather data from sensors embedded in everything from transit vehicles and traffic lights to video cameras and utility meters. The companies said the new platform will help improve urban planning and allow cities to improve resource allocation across metropolitan environments by analysing the movement of people, improving traffic and parking capacity as well the response times of first responders in the event of emergencies.

Germany’s opposition to the US government’s snooping activity has been well documented and this week Chancellor Angela Merkel called for the creation of a secure European communications network that would avoid US-based networks and servers.

The idea raised eyebrows and questions, particularly about the compatibility of Neelie Kroes’ proposals to create a well-governed ‘Open Internet’ while Merkel calls for an “EU only”  infrastructure. The EC pledged its support for the Merkel’s call for better security and data protection but declined to comment on how the two proposals would feasibly coexist.

A number of operators also made investments in new solutions this week, with vendors keen to publicise their work with customers in the week before Mobile World Congress.

Canadian billing and charging specialist Redknee Solutions has announced a $ 6m deal with Austrian incumbent Telekom Austria that will see the vendor’s real-time billing, charging and customer care solution deployed across the operator’s portfolio in Central and Eastern Europe.

Earlier this month Redknee announced a deal with Telekom Austria’s Croatian subsidiary, Vipnet. In both instances Redknee emphasised the benefits of its solution for multiplay operators looking to deliver bundled solutions.

Günther Ottendorfer, CTO at Telekom Austria Group, said that the deal is part of the group’s plan to expand its presence in existing markets by delivering differentiated communications solutions to customers.

Orange Slovakia also this week tapped up B/OSS specialist Openet for a Policy and Charging Control (PCC) infrastructure to enable a major rollout of advanced shared data bundles. The deployment makes it possible for Orange to quickly define segmented data offers, with associated balances, notifications and policy rules for its 2.8 million subscribers.

Network vendors Huawei, Alcatel Lucent and NEC all made announcements around Network Functions Virtualization (NFV) ahead of next week’s show, where new network architectures like NFV and SDN will be the subject of much discussion and, The Informer understands, some big news from the operator community.

Huawei has unveiled Cloud Edge, an umbrella brand for its NFV suite, which includes virtualized Evolved Packet Core (vEPC), virtualized Multi-Service Engine (vMSE) and Cloud Management and Orchestration (MANO). Meanwhile Alcatel-Lucent announced its own suite of NFV solutions, including EPC, IMS and a virtualized RAN. The last of these will be displayed at MWC in partnership with the world’s largest operator, China Mobile, the firm said.

Japanese vendor NEC launched what it claims is the world’s first virtualised Mobile Virtual Network Operator platform (vMVNO), running in a Network Functions Virtualization (NFV) environment.

The system is installed with an MVNO in order to establish connectivity between an MVNO’s own communication network and the piggybacking carrier’s mobile network. This enables enhancement of security and certification, as well as control management of communication bands and usage amounts.

In other news, European and LatAm operator group Telefónica’s start up incubator Wayra struck an agreement with Chinese incubator Virtue Inno Valley (VIV) to promote their businesses in each other’s geographic territories. The two incubators said that the agreement will enable them to promote and share entrepreneurial expertise, mentoring programs, training, institutional relationships, media, financial and commercial resources as well as investment opportunities.

Ericsson also signed a global deal with network specialist Ciena this week that will see the Swedish vendor integrate Ciena’s technologies into its own offerings, with the two firms collaborating on future technological development.

The Swedish vendor will offer Ciena’s converged packet optical product portfolio to its customers migrating to converged network architectures. The US based firm’s WaveLogic coherent optical technology will also be integrated in to Ericsson’s IP portfolio and sold by the vendor as part of its IP router portfolio.

The two firms said they are committed to promoting the take up of open, programmable, software defined networks. They added that they are looking to combine their resources and expertise to jointly develop and bring to market SDN technology to operators.

And finally, Vodafone claimed that from this summer, it will offer LTE roaming to more countries than any other mobile operator and it will not charge a premium for such services.

Consumers and business customers travelling overseas will be able to take advantage of LTE mobile services when using their smartphones and tablets in 18 countries worldwide for no more than the cost of existing 3G roaming tariffs such as Vodafone’s pan-European Union daily roaming price plans. Vodafone’s daily roaming proposition now has 11 million registered customers, the company said.

The announcement chimes nicely with the findings of the Telecoms.com Intelligence Industry Survey 2014 LTE roaming section, sponsored by KPN-owned IPX provider iBasis, in which only around a fifth of respondents strongly believe that mobile operators are justified in charging LTE roaming at a premium to other roaming services.

Price is expected to remain an important competitive differentiator in LTE roaming, although not the most important. Telecoms.com asked respondents to rate a number of competitive differentiators for roaming services on the same one to seven scale (where seven was extremely effective). Of the six options provided, price differentiation was ranked fourth by respondents in total and third by operator respondents.

The wait for the full report is almost over. The 2014 Telecoms.com Intelligence Global Industry Survey, which drew responses from more than 2,000 industry professionals, including more than 700 operator representatives, will be made available to download next week.

See you in the mayhem,

The Informer

Telecoms.com

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