ThREE TO tangoRegulators, shareholders and consumers keep telecoms operators on their toes in a difficult economic climate

news in brief

3 Timeline A round-up of some of the major stories reported in our daily news service www.totaltele.com

DeViCe sTrATeGies

6 Bring your own device (BYOD) The growing trend of employees bringing their own smartphones and tablets into the workplace provides a new revenue stream for mobile operators.

bUsiness AnD finAnCe

9 Cash reserves europe’s biggest telcos are keeping a tight rein on capex as top-line growth grinds to a halt.

rOUnDTAbLe

13 Mobile broadband executives from Deutsche Telekom, france Telecom, Telefonica, bT and others discuss future revenue opportunities for mobile operators, including Qos, CDn services and the need to diversify into new industries.

sTATisTiCs

20 Prime numbers M2M connections, telepresence and videoconferencing equipment, and the world’s biggest mobile operators ranked by subscribers.

lEadER cOnTEnTs

Mary lennighan Editor

total telecom

BusinEss analysis fOR TElEcOMs pROfEssiOnals novEmbER 2011

when economic times are tough, talk in the tele-coms space invariably

turns to in-market consolidation, as service providers spy opportuni-ties to build scale, generate synergies and lower operating costs. but as Vodafone has discov-ered, as it aims to merge its Greek operations with those of rival player wind Hellas, it is not always a straightforward process.

“it takes three to dance - you, the other one, and the regulator,” Vodafone CeO Vittorio Colao said at the company’s first-half results announcement earlier this month, noting that the mobile operator is still in talks over its Greek business.

in the meantime, in a move that illustrates the difficulties telcos are facing in europe at present, Vodafone took a £450 million writ-edown on its Greek business in the first half of the year. And regarding europe as a whole: “we are not expecting a disaster, but we are expecting hard work,” Colao said.

Vodafone is not alone. europe’s major telecoms operators are taking great pains to keep investors happy, reining in capex and focusing on cash-generation as overall business

There’s a lot of dancing in the mobile industry

growth eludes them (see p.9). Operators are investing, but only where strictly necessary, which could trigger a new wave of network sharing or even M&A.

Hefty investments in LTe networks are still not front-of-mind for mobile operators, despite the fact that heavy data users are keeping them on their toes, as our roundtable (p.13) shows. Thanks to sponsor sybase, we brought together the big players in the european mobile broadband market to discuss how operators need to evolve in order to address the inbalance between projected data traffic and revenue growth.

Partnering with other players within and outside the industry will be key, but it’s not always easy to figure out who to work with. “There’s a lot of dancing,” accord-ing to our panellist from Telefonica. Generating revenues “by stealth” also features in the mobile opera-tors’ plans.

There’s no longer any need for stealth when it comes to using your own mobile phone or tablet for work though (see p.6). Operators are starting to embrace the bYOD phenomenon, unveiling services that allow enterprise customers to segment employee smartphones into a work and a personal profile. which means you don’t need to carry two devices with you when you go out dancing after a long week in the office! n

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TiMElinE

warehouse out of their joint north American business. The retailers will also close 11 large best buy stores in the UK.

UN wants broadband regsA United nations commission has called for regulatory intervention to make broadband more affordable in emerging markets. The commission says entry-level broadband services should cost no more than 5% of average monthly income.

Verizon sells payphonesVerizon Communications has agreed to sell almost all its remaining 50,000 payphones to Pacific Telemanagement services. The deal will leave the Us telco with just 4,000 payphones, down from half a million in 2000.

Amex goes digitalAmerican express will invest $100 million in early-stage start-ups in the digital commerce space as it seeks to push in to e-commerce and mobile payments. The credit card company will focus on minority investments, but has not ruled out making full acquisitions.

Google+ open to businessessocial network Google+ is now open to businesses and brands. The service has attracted more than 40 million individual users since it launched in June.

Big bills from dodgy devicesCustomers returning malfunctioning Android devices for repair or replacement are costing mobile operators as much as $2 billion per year, according to wDs.

acquiring a 20% stake in the south African telco for around $600 million.

Oracle buys RightNowOracle Corp has agreed to pay $1.43 billion for right now Technologies, a provider of cloud-based customer service software.

India may allow M&Aindia’s telecom regulator has proposed changes to the rules that would allow mergers and acquisitions in the telecoms space. if approved, the rules will become part of the country’s new telecom policy due to be unveiled at the end of the year.

Bharti, Softbank JVindia’s bharti enterprises and Japanese telco softbank have founded bharti softbank Holdings, an india-based joint venture that will focus on the development of the mobile

BUSINESS

ALU gets $1.5bn Genesys offer Private equity firm Permira has submitted a $1.5 billion binding offer for Alcatel-Lucent’s customer service software unit Genesys.

NSN sells microwave businessCanada’s Dragonwave has agreed to pay €10 million in cash and €5 million in shares for nokia siemens networks’ microwave data transmission business. 360 nokia siemens employees will transfer to Dragonwave.

France Telecom in Congo dealfrance Telecom will acquire Congo Chine Telecom, having agreed to pay $10 million to ZTe for its 51% stake and $7 million to the DrC government for its 49%. fT will invest $185 million in the telco, most of which will be used to pay off debt.

HP in PC U-turnnew HP CeO Meg whitman announced that the company will keep its PC business in a dramatic reversal of her predecessor Leo Apotheker’s controversial plan to explore the sale or spinoff of the unit.

Qualcomm gets India licenceindia’s Department of Telecoms has confirmed that Qualcomm will receive licences to operate wireless broadband services in all the areas in which it holds spectrum.

KT plans $600m SA movesouth Korea’s KT Corp is in talks with Telkom sA with a view to

internet. its three key areas of focus are social media, gaming and e-commerce.

FT, DT purchasing JVfrance Telecom and Deutsche Telekom have launched buyin, a joint venture through which they will purchase network equipment and software. After three years france Telecom aims to have saved just under €900 million a year and Deutsche Telekom over €400 million.

BT must block piratesThe UK High Court ordered bT to block access to newzbin2, a website accused of promoting illegal filesharing by a number of Hollywood studios. The UK incumbent is also required to pay the implementation costs of the blocking order.

Carphone sells out of USbest buy has agreed to pay $1.3 billion to buy Carphone

a roundup of the major stories in telecoms in the past month, as reported in our daily news service www.totaltele.com

Source: Strategy analytics

Global handset shipments and market shares Q3 2011

global mobile handset shipments grew by 14.2% annually to 390 million units in the third quarter of 2011, according to research from Strategy analytics. ZtE was “the star performer”, capturing a 5% share of the market and overtaking apple to become the world’s fourth-largest handset maker. meanwhile, market leader nokia saw its share slip as strong sales of dual-SIm devices in emerging markets failed to offset weak demand for high-end phones in the developed world.

global handset shipments (Millions of units) Q3 ‘10 Q3’11nokia 110.4 106.6samsung 71.4 88.0lg 28.4 21.1ZTE 14.0 18.5apple 14.1 17.1Others 103.2 138.6Total 341.5 389.9global handset Vendor Market share % Q3 ‘10 Q3’11 nokia 32.3% 27.3%samsung 20.9% 22.6% lg 8.3% 5.4%ZTE 4.1% 4.7%apple 4.1% 4.4%Others 30.2% 35.5%Total 100% 100.0%global handset shipments growth year-over-year % 15.2% 14.2%

NETWORKS

EU’s €9.2bn broadband bidThe european Union announced plans to plough €9.2 billion into broadband and digital public services development between 2014 and 2020. it hopes this will trigger private investment of €6-€15 per euro of funding.

BT ahead on fibre planbT will complete its project to roll out fibre broadband to two thirds of UK premises by the end of 2014, a year earlier than it originally forecast. it will bring forward around £300 million of its planned £2.5 billion investment and recruit 250 engineers to work on the project.

Ericsson sees 10X data growthGlobal mobile mobile data traffic will double this year and grow tenfold over the next five years, according to ericsson.

Nokia unveils Windows phonesnokia’s first smartphones based on the windows operating system will hit the shelves in europe in time for Christmas. The finnish vendor presented the high-end Lumia 800 and mid-range Lumia 710 at nokia world.

NZ Telecom spinoff approvedshareholders of new Zealand’s Telecom Corp voted in favour of separating off the company’s Chorus infrastructure arm, one of the conditions for Chorus’ participation in the country’s national fibre network project.

Telstra gets NBN OKTelstra will participate in the Australian government’s national broadband network plan, having received the go-ahead from shareholders. Telstra will close down its copper network over the next 10 years and transfer customers over to nbn Co.

Google mulls European fibreGoogle is considering building out a fibre network in europe, a company executive told the french government without sharing further details.

Vodafone ditches 360Vodafone will close its 360 synchronisation and cloud backup service by the end of the year.

Colombian fibre dealMexico’s TV Azteca has won a tender to roll out a fibre-optic network in Colombia. The media group has not disclosed how much it will invest in the project, but said the Colombian government will provide $230 million in funding.

India’s 100m+ surfersThe number of internet users in india reached 112 million in september, according to a new, locally-produced study. The internet and Mobile Association of india predicts the country’s online population will exceed that of the Us in less than two years.

Sprint plans LTE launchsprint nextel will begin rolling out an LTe network in the Us next year, simultaneously pulling back from the wiMAX service it offers over Clearwire’s network. As a result, Clearwire needs to raise capital to support operations beyond the next 12 months.

Razr rises againMotorola has resurrected its iconic razr brand, with the launch of the razr Droid smartphone for Verizon wireless. The device will run on the Us operator’s LTe network.

iPhone ups and downsApple set a new company record with the sale of 4 million iPhone 4s units in the three days after

TiMElinE

OVER TO KaZKazuo Hirai, executive deputy president of Sony Corp, has been charged with the task of coming up with a new brand name for Sony Ericsson after sole control of the mobile device maker passes to its Japanese parent. Ericsson has agreed to transfer its 50% stake in the company, plus related intellectual property, to partner Sony and will in return receive $1.05 billion in cash. the companies expect the deal to close in early 2012. there are as yet no indications as to what Sony Ericsson’s new brand will be; “It’s prob-ably a job for Kaz Hirai,” said Sony Ericsson CEo Howard Stringer, presiding over a press conference to announce the change of ownership in London in late october. Hirai, often tipped as the next CEo of Sony, is also in charge of Sony’s consumer products and services group, which in-cludes its consumer electron-ics and videogames business-es. He recently declared that turning Sony’s tv business profitable is his number one priority. the takeover of Sony Ericsson is designed to further the company’s four-screen strategy, enabling Sony to integrate its new smartphones more closely with its other consumer offerings, including gaming devices, tvs and its various content businesses. The firm also hopes it will kick start a move into the US, where it has thus far struggled to forge relationships with mobile operators. after Sony reported a hefty Q2 loss ear-lier this month, Hirai was also charged with leading a new strategy to cut annual costs at the business by ¥125 billion (€1.2 billion) over the next few years.

it launched. However, in Q4 the company sold fewer iPhones than some analysts expected.

100m+ 3G users in ChinaThere were 102 million 3G mobile phone users in China by the end of september, up from just under 35 million a year earlier, according to the Ministry of industry and iT. China Mobile leads the market with 43.2 million 3G customers.

PEOPLE

Ev Ev axes middle managerseverything everywhere confirmed it has cut 22 middle management posts as part of a strategic review led by new CeO Olaf swantee. it later announced an additional 550 staff cuts. The UK mobile operator also gave acting CTO fotis Karonis the role on a permanent basis.

Charter CEO resignsMichael J. Lovett will step down as CeO of Charter Communications by 30 April 2012, or as soon as a replacement is found.

Moto cuts 800 jobsMotorola Mobility is to shed 800 staff, at a cost of $31 million, as it prepares for the close of its takeover by Google. The cuts will affect its mobile devices and home businesses.

Anatel gets new headJoao batista de rezende has been appointed president of brazilian regulator Anatel, a post he will hold for a two-year term. He replaces ronaldo sardenberg, who has been in charge of Anatel since mid-2007.

Sawiris leaves Orascom boardegypt’s naguib sawiris has resigned from the board of Orascom Telecom.

4 www.totaltele.com november 2011

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Mobile operators are starting to recognise that there is an opportunity to generate reve-

nues from ‘bring your own device’, which as a phrase entered popular industry parlance only this year, but has been a growing trend for businesses for some time.

in recent months some of the world’s biggest operators, including AT&T, Verizon, Telefonica and Vodafone, have demonstrated that bYOD is on their agenda, unveiling offerings to help enter-prise customers manage its risks and realise its benefits.

for enterprises bYOD is a balancing act. by allowing staff to use their own devices – smartphones or tablets – to access corporate data and applications, they can effectively mobilise their work-force without incurring hefty handset procurement costs. but it also presents potentially catastrophic data security risks and throws up a raft of device support and management issues.

“bYOD represents a great opportunity because it is top of mind for [enterprise] customers,” says Mobeen Khan, execu-tive director for advanced mobility services at AT&T.

indeed, by July 2011 75% of companies worldwide were allowing the use of

employee-owned devices for business purposes, according to Aberdeen Group. And this month a Casio-commissioned YouGov survey revealed that only a fifth of UK employees are not permitted to use personal devices such as mobile phones, laptops and tablets for work.

Other analysts are less bullish. Ovum’s most recent survey on european enter-prise adoption of bYOD showed that while 50% of respondents had been given browser-based access to corporate email from personal devices, 43% were banned from accessing any kind of corporate data at all (see charts p.7). And according to a Gartner CiO survey carried out in May this year, the overwhelming majority of respondents in both europe and the Us expect that by 2013 less than 20% of the devices in use in their organisations will be owned by the employees.

nonetheless, that still provides opera-tors with a sizeable market to address.

“People are bringing their own devices. People want to use tablets, people want to extend what they normally do on a PC to their personal devices,” said Vodafone CeO Vittorio Colao, speaking at the mobile operator’s first-half results pres-entation earlier this month. “[bYOD] is a trend which goes in our direction, because device management becomes

very important, because security manage-ment becomes very important,” he said.

The operator conducted an internal study into the business value of tablets starting in late 2010 that showed most employees use tablets as a complemen-tary device rather than a replacement for laptops and smartphones. Participants appreciated the productivity benefits of an always-connected device, but they were also acutely aware of the security risks associated with a lost tablet.

Meanwhile, AT&T says it has identified 50 million employees in the Us alone who currently do not own a corporate handset but would benefit from gaining access to company data and applications. To help address this demand in October it unveiled Toggle, a solution that separates a user’s smartphone or tablet into two distinct profiles: personal and work. switching to the latter gives the employee access to their corporate email, applica-tions and shared calendar.

“it’s not the device we’re targeting, it’s the identity of the user,” Khan explains. “everyone is looking to solve this problem in an elegant way... The iT guys want to feel comfortable about their data without having to support all the minute details of the [employee’s] device.”

Toggle comes with a web-based admin tool that enables the iT department to manage access to specific company resources; add, update and delete busi-ness applications; and wipe all corporate information stored on the work profile in the event that an employee leaves the company or loses the device. The enter-prise can also call on AT&T to provide customer support. And the iT depart-ment can monitor corporate usage while the device is in work mode and reimburse any costs incurred by the employee.

“The administrator has no view into the employee’s personal apps and usage, but they have a 100% view of it when it is in work mode,” says Khan.

Toggle is sold as a subscription service

mobile operators show bYoD is on their agenda as enterprises deal with the risks as-sociated with employee-owned tablets and smartphones. By nick Wood

dual PERSonaLItIESB R I N G Y O U R O W N D E V I C E

dEVicE sTRaTEgiEs

Employee-owned devices

35

30

25

20

15

10

5

0

50

45

40

35

30

25

20

15

10

5

0

Source: gartner CIo survey (may 2011)

Less than 20

Less than 20

21-40 21-4041-60 41-6061-80 61-80more than 81

more than 81

num

ber

of re

spon

dent

s

num

ber

of re

spon

dent

s

In two years time, approximately what percentage of the mobile devices (laptops, tablets and cell phones) used in your organization will be owned by employees?

US Europe

november 2011 www.totaltele.com 7

costing $5 per employee per month, significantly less than it would cost a business to procure a handset. “The comparison is pretty simple: it’s a lot cheaper,” says Khan.

Missing out on a large-scale, all-encom-passing managed mobility contract that covers calls, sMs and data might appear on one level to be a backwards step for a big telco, particularly given that Toggle users do not even have to be AT&T customers. However, the flip side of this is that as a result AT&T has an opportu-nity to generate $5 per month from its rivals’ customers. “we would like them to all be AT&T customers,” Khan says. “but we’re more focused on providing comprehensive solutions; whose network they’re on doesn’t matter.”

Toggle is currently only available for smartphones and tablets powered by Google’s Android operating system (Os); however, Khan recognises the impor-tance of producing platform-agnostic products, and says AT&T is working closely with its partners to deploy Toggle on a broader range of devices.

“we went with Android first because it has a very large and increasing user base, so it made sense for us... it’s as good a place as any to start,” he says. However, “the pace of new devices is skyrocket-ing... employees are bringing in all kinds of devices, although senior executives are usually the first ones to break the rules.”

it is a view shared by Andrew borg, senior research analyst at Aberdeen Group, who notes that while blackberry, symbian and windows historically have been the most prevalent mobile platforms in the enterprise, Apple’s iOs and Android have made significant headway. “The one constant has been the rapid pace of change,” he says. “enterprises need agile solutions that can accommodate any mobile platform.”

Us-based Verizon wireless and spanish incumbent Telefonica also aim to create Android smartphones with dual person-alities. The operators in October separately partnered with VMware to bring the virtualisation specialist’s Horizon Mobile solution to their respec-tive enterprise customers, enabling iT

departments to provision and manage corporate mobile profiles on employees’ handsets over-the-air.

Cisco last year extended its AnyConnect VPn client, which is designed to provide secure remote access to corporate networks, to a number of mobile plat-forms including blackberry, symbian and iOs. it recently emerged that the latest version of Android, known as ice Cream sandwich, will also be AnyConnect-compatible.

“More and more companies are expect-ing their employees to bring their own devices,” says scott Puopolo, VP, service provider practice at Cisco’s internet busi-ness solutions group. “but there are a lot of concerns over security.”

Much like the telcos, Cisco sees a future in which virtual machines are installed on employee-owned handsets that effec-tively create a device with both a personal profile and an enterprise-controlled one. “[bYOD] requires the cloud to be success-ful,” says Puopolo.

Meanwhile, Gartner predicts that global businesses will be required to

support at least three smartphone plat-forms by 2012, while some should be expected to support up to five.

“CiOs need to explore new ways to provide, fund, and manage mobile devices to allow employees more choice and support bYO programmes,” says Gartner vice president nick Jones. “bYO is a prin-ciple that most organisations will adopt and organisations must prepare for this change.”

“enterprise customers are being consu-merised,” says interoute CTO Matthew finnie. “when i talk to the CiOs of our customers they say their biggest problem is security,” he says, noting that securing down to the desktop is no longer suffi-cient. “All of a sudden they are accepting that the perimeter is porous and there’s nothing they can do about it,” he says.

“Talk to any iT manager and they’re still hanging on to this end-point admin-istration model and saying: ‘if i buy all the devices from one software vendor who’s got that [model], then maybe it will work’. but then their employees walk in and say, ‘but i like this one’.” n

dEVicE sTRaTEgiEs

Enterprise access permitted from mobile devices

not permitted

Full access to Lan

Limited access to Lan

Remote access to all resources

Limited remote access

Remote access to specific apps

Remote access to collaboration portals

browser access to email 50%

Source: ovum, EEma Europe survey

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

4%

5%

25%

10%

11%

8%

43%

Corporate applications accessed from personal mobile devices

Corporate email

Enterprise portal access (intranet, sharePoint)

Enterprise resource planning, supply chain managment, expense management tools

Customer relationship management

Source: ovum, EEma Europe survey

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

9%

9%

28%

90%

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9november 2011 www.totaltele.com

cash ConSIDERatIonI N V E S T M E N T S T R A T E G I E S

With Europe’s telcos building cash reserves and monitoring costs, thoughts naturally turn to consolidation. By Mary lennighan

BusinEss and financE

europe’s big telcos have stopped growing and as a result they are being very careful when it comes

to spending.Quarterly results presentations from

the major european incumbents over the past weeks all followed a similar pattern, with CeOs and CfOs highlighting cost-cutting plans, the need for cash-generation and capex restraint. with little to no top-line growth, telcos need to boost investor sentiment by maintaining free cash flow and that can mean only one thing for the industry: investment will only happen where strictly necessary, something that could ultimately lead to less facilities-based competition.

“The financial community don’t see any prospect that the telcos are going to grow their businesses,” Tony Lavender, CeO of Plum Consulting, says. As such, they are particularly “interested in cash.”

As Total Telecom’s recently-published Global 100 report - which ranks the world’s biggest network operators by revenue – shows, europe’s big incum-bents for the most part reported flat or declining revenues in the most recent financial year (see chart, right). The picture was similar when those same telcos posted their latest quarterly results: only those with a strong presence in higher-growth markets recorded signifi-cant revenue growth.

in its fiscal second quarter bT reported 0.4% growth in underlying revenue and a 2% decline in adjusted revenue to $4.89 billion; Deutsche Telekom posted a 4.1% decline in revenues (excluding T-Mobile UsA) to €10.99 billion in Q3; and there was a 3% dip in revenues for france Telecom in Q3 to €11.28 billion. Telefonica and Telecom italia both saw growth at their Latin American businesses offset

weakness at home, reporting revenues of €15.79 billion (up 3.7%) and €7.52 billion (up 13%) respectively. However, both experienced mid-single-digit declines at their european businesses.

And things are unlikely to change in the near future.

“i don’t want to pour water into the wine, but i think we should be realistic and a little cautious with regards to the economic outlook in our european foot-print,” said Deutsche Telekom CeO rene Obermann, speaking on the German incumbent’s third-quarter results pres-entation. “we will cut back as much as we can on the cost side in order to mitigate these economic uncertainties.”

in addition to a focus on cost, execu-tives at the top of europe’s biggest operators are also taking great pains to reassure shareholders that they are on track to meet free cash flow targets and

have no plans for hefty investments.“it’s not like the old days,” bT CeO ian

Livingston said, reassuring attendees at his company’s results presentation that planned infrastructure investment in the Middle east, Asia and Latin America will be in the order of “tens of millions of pounds”. furthermore, that investment will enable bT to “cut our costs and give us revenue opportunities,” he said.

That is not to say there will be no infra-structure investment in developed markets though. “it [just] means it’s got to be very measured,” says Lavender.

bT is also investing in its domestic market and late last month it announced that it will accelerate its fibre network rollout plan by a year, covering two thirds of UK premises by the end of 2014. but Livingston emphasised that this will not impact on the telco’s capex plan.

“You can assume that in our overall capex envelope, we have some contin-gency for further investment just generally. And we’ve also become more efficient,” said Livingston, insisting that all fibre investment will be incorporated within bT’s £2.6 billion capex budget.

Telecom italia, meanwhile, has revised its end-2011 net debt target up to €30.7 billion from a predicted €29.5 billion as it

Now the question becomes what to do with those free cash flows?

The worlds top 15 telecoms operators ranked by revenues

Source: global 100 2011, 2010

0 10 20 30 40 50

Revenues in E (billions)

60 70 80 90 100

bt

Sprint

China telecom

Softbank

telecom Italia

KDDI

america movil

France telecom

vodafone

China mobile

telefonica

Deutsche telekom

verizon

ntt

at&t

n 2010/2011n 2009/2010

10 www.totaltele.com november 2011

BusinEss and financE

will pay €1.2 billion for LTe licences in italy. And in Australia Vodafone is spend-ing to deploy single rAn equipment that promises cost savings in the long run.

“it’s got to be about how you avoid unnecessary cash spend,” and one of the ways to do that is to share networks, says Lavender. “it’s already happening,” he says, pointing to UK mobile joint venture everything everywhere.

Meanwhile, Ofcom chief executive ed richards is backing the use of wavelength division multiplexing (wDM) – which essentially enables multiple signals to be transmitted on a single fibre - to boost competition in the UK fibre market. speaking at Total Telecom world earlier this month, richards predicted that telcos could start deploying wDM technology in their access networks by 2015.

with telecoms operators building cash reserves and looking closely at the cost of running networks, thoughts naturally turn to consolidation.

“You buy a telecom company broadly for the free cash flow,” says Carl Murdock-smith, telecoms equity research analyst at JP Morgan, speaking from the point of view of the investment community. “The focus on free cash flow has been to address balance sheets and ensure that companies don’t struggle to refinance in a difficult broader environment,” he explains. “now that de-gearing has at least to some extent been achieved, the question becomes what to do with these free cash flows?”

The answer is either to pay out more to shareholders or turn to M&A. “There remain some opportunities for consoli-dation within markets, or emerging market opportunities,” he says.

However, the telcos themselves are choosing their words carefully when the subject of acquisitions is broached. “no destructive M&A,” was the message from Deutsche Telekom CfO Timotheus Hoettges.

As well as keeping a close eye on the numbers, telecoms operators must make sure they are sending the right message out to the market. And one of europe’s big players has arguably done a better job than most in this area.

“it’s not fundamentals that drive share price, it’s sentiment,” says Murdock-smith. “never underestimate the human nature of the investment community.”

Murdock-smith highlights bT as one company that has successfully courted the analyst community. “[bT is] best in class in terms of messaging,” he says. “Under-promise and over-deliver. That’s [CeO Livingston’s] mantra.”

when it comes to attracting investors, “you’re looking for sustainable pricing power,” Murdock-smith says, but this can be difficult in an industry in which super-normal returns are normally competed or regulated away. However, the UK consumer fixed-line market could be attractive to investors in the current climate, with prices picking up after 20-30 years of deflationary pricing. “The

broadband market is maturing,” he says; churn has come down and is still falling due to increased bundling of services.

Murdock-smith also identifies the Us mobile market as one to watch, with the likes of AT&T and Verizon wireless in particular performing well. “it is a posi-tive market to be exposed to,” because of its structure and lack of regulatory drag, he says. “we are therefore very positive on Vodafone,” due to its exposure to Verizon wireless.

Vodafone is due to receive a $2.8 billion divided from its 45% stake in Verizon wireless in January, a sum that will trans-late to 4 pence per share for shareholders. in addition, Vodafone has increased its interim dividend by 7% to 3.05 pence.

“There are no [mobile] termination fees in the Us...This means that in the Us overall revenues can be driven by growth in traffic and are not cannibalised by falling receipts from termination fees, as in europe,” noted Credit suisse in a recent report.

Deutsche Telekom, for example, posted a 3.1% decline mobile service revenues at its domestic business in Q3; excluding the effect of reduced MTrs, the figure was essentially flat.

Vodafone, excluding the contribution from Verizon wireless, reported 2% service revenue growth for the year to 30 september, but that figure rises to 3.3% including the Us operator, according to CfO Andy Halford. similarly, “ebiTDA margin would be about two percentage points higher... rather than being a £15 billion ebiTDA company we would be a £22 billion company and free cash flow, rather than being around £6.2 billion would be about £9.6 billion.”

“The Us also has the edge in terms of cash flow,” Credit suisse adds. “in recent years free cash flow has risen by an average of 19% per year in the Us, while in europe it has fallen by 3.7% per year under regulatory pressure,” despite the fact Us operators have invested more in their networks of late. “This trend looks likely to persist because the Us compa-nies have better conditions for benefitting from mobile data traffic,” the firm concludes. n

Service provider capital expenditures worldwide

325

260

195

130

65

0

20%

15%

10%

5%

0%

Source: Infonetics Research

2011 2012 2013 2014 2015

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13november 2011 www.totaltele.com

M O B I L E B R O A D B A N D

sTEalTh REvEnUESmobile operators need to take a share of revenues from adjacent industries, ideally in ways that are invisible to the end-user.

Mobile data traffic will increase 17-fold to 41 exabytes globally in 2020, up from 2.3 exabytes last year, according to new statistics from Machina Research. However, as company director Matt Hatton pointed out - while chairing a Sybase-sponsored roundtable, bring-ing together key executives from the mobile broadband world in London last month - revenue will grow just four-fold over the same period, reaching almost €300 billion in 2020.

as network operators, how do you resolve that? how is the industry evolving?

steve haines: You’ve got to look at different models to see how you can network share. And that’s got to include the mobile operator, particularly when you look at the next wave of LTe development and the locations you’ve got to put into that. it’s a scale business. You can’t afford to have too many independent networks in a scale business.

derek McManus: There’s not enough revenue for everybody to do it on their own. The industry has to change its operating model. A 17 times increase in volume and only a four times increase in revenue: that’s a non-sustainable model. There has to be more collaboration across the industry and i don’t just mean at the telco end. who’s going to

work together? That’s the exciting part. everything everywhere is a great step forward in terms of bringing some sense to the market, but the challenges of those businesses coming together are there for everybody to see. we know what we want from this industry, but we know it has to be with other players. There’s a lot of dancing going on between players.

glyn Baker: There’s a lot of dancing, but noone’s actually getting off the chair and going into the middle of the floor.

McManus: Most of the operators that come to the UK at the mobile level are as efficient as they can get within their own entities. They can’t get any more efficient so they have to make structural change to keep that growth going. And that’s as much to fund investment as it is to maintain margins.

glyn Baker: it’s not that our consumers are necessarily pulling services down; they’re being pushed down. The problem is the launch of these new services that just get thrown out onto the internet - [music

service] MyPlay was a classic example. nobody cares about the infrastructure on the content side, and then we have to pick up the pieces.

McManus: The two things you’re after are services the customers value and a relationship with customers that’s sustainable. The content players have got one of them and we’ve got the other. Can we get our act together and stop everybody getting to that relationship before we get to that value? The challenge we face today is how do we pick up the pace and get that economy to scale to go after other industries. There’s a bigger competition between our industry and the financial services industry and the advertising industry and the content industry. That’s the big battle and if we don’t get it right, they’ll just wash over us and we’ll become a dump site.

is there a readiness from consumers to pay for a higher quality of bandwidth?

Baker: no, not at all. They just want service. when we launch LTe properly,

Matt hatton, director, machina Research (moderator)derek McManus, chief operating officer, telefónica o2 UKJohn sims, president, Sybase 365Matthew finnie, Cto, Interouteglyn Baker, vP business development, Deutsche telekomdirk van Bavel, director, consumer propositions, France telecom-orangegeorge Wareing, head of mobile and broadcast, wholesale markets, virgin mediasteve haines, chief operating officer, BT Wholesale

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14 www.totaltele.com november 2011

we’re not going to be able to raise the price by 10 times. we might be able to raise it by 20% to give people bundles of way more bandwidth and way more capacity. i think we’re a long way away from service differentiation.

McManus: it’s a bit like paying to use [easyJet’s] speedy boarding at Luton airport. we’re in the shelter of the storm; right now there isn’t a glut of supply so there are challenges and problems that everybody faces because of that. when LTe kicks in, there will be a glut of supply. in a world of a glut of supply, would i want to pay for speedy boarding if i turned up at Luton and there was nobody there? no, i wouldn’t.

is there anything enterprise customers would pay for that consumers maybe wouldn’t?

Baker: i don’t think any market is really concerned [with paid-for Qos]. nobody’s getting forced to invest really heavily in infrastructure. every operator i know is still questioning the need to deploy LTe. it’s not like it’s the most burning issue. There’s far more on 3G and whatever else.

Matthew finnie: skip the bandwidth bit. what enterprises really want from mobile is the same thing they’ve always asked for: one bill, one tariff that’s sensible right across the footprint. They can’t get that. we operate in 29 countries right across europe and we have 29 different mobile contracts. we try to work with the same one but you cannot get any kind of discount.

presented it to you as: ‘you’re going to have 0.08 [passenger/luggage] screeners per square foot here and you’re going to have 0.12 over here, which do you want?’ How do passengers relate that to what they’re doing? it doesn’t make sense. sometimes the industry gets challenged by how to present it to the consumer so that they know what is more valuable. sometimes it’s too complex and it’s not well understood by the average guy in the street.

McManus: The difference between delivering voice and text in the old world and delivering mobile data is phenomenal. The consumer doesn’t get megabits, doesn’t get bandwidth, doesn’t get any of that. it’s just press the button and it should work. They don’t understand why it doesn’t work. i don’t think, as an industry, we quite understand that.

haines: Unfortunately, we’re thinking like network people and we need to think like users. And don’t think like a marketing person because at the moment you’re talking about the early adopter market which is complex and therefore a little bit geeky. i know we can’t deliver it yet, but as a user i would pay a premium for always best connected. i don’t know what that’s worth - £5 a month, £2 a month?

Baker: but you watch what happens to churn when an operator sticks their head up and says we’re going to charge five quid [more].

van Bavel: Operators need to take care of giving the right promise to their customers because otherwise you create dissatisfaction and you have people churning off your network. first of all a premium only works if 98% of the people are not on the premium and secondly, it only works when you can explain easily what it actually means.

george Wareing: There are a lot of analogies between the fixed-line space and the mobile play. we tried to do the same with fixed broadband. Virgin

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dirk van Bavel: enterprises always look for the discount. in the consumer market, ultimately segmentation will happen based on things like speed, but it depends on the maturity of the market. we are enjoying the fact that customers are picking up smartphones. it’s not the time to make the choice even more complex; people don’t know how much they’re going to use, so it makes absolutely no sense to start talking about high priority, low priority and so on. However, when nearly everybody is using this daily, they will have a good knowledge of what they want and at that point a better fitting package - rather than a ‘one size fits all, please go ahead and explore’ - will definitely make more sense. And that’s the time when speed-based or other parameters will kick in to the propositions.

McManus: right now 3G can’t provide quality of service. Technically you can; you can put parameters and it will ostensibly tell you you’re getting quality services but as a customer, would you see it? no. so would you pay for it? no.

Baker: it’s extremely difficult to differentiate because there are so many variables to do with networks, like how many people are standing in the same cell area. That’s not very easy to predict.

McManus: And the investment to provide it is just not viable so it’s not going to happen in 3G.

John sims: The concept of going through the fast line at the airport is easy to understand. but what if they

george Wareing

steve haines

november 2011 www.totaltele.com 15

didn’t touch it because they were scared of big bills. so data usage will go up.

Baker: The industry is well advanced in starting to deal with the data roaming issue. everybody wants free roaming internationally. OK, give us all the money back we paid for licences and we’ll offer that. The market wasn’t built like that and therefore when neelie Kroes, or whoever the latest eU commissioner is, bangs on about that, we just have to say, ‘you didn’t build the markets like that: you can’t have it both ways.’ [Users] just need to be able to understand consumption in the roaming space. i don’t think the answer is just to give them everything. The industry wasn’t built like that.

finnie: if you were to do what the incumbents did with DsL, which is turn it into a wholesale offer. if you were to do that with your mobile networks, which are your access networks as well, then someone else can come in and buy a big lump of infrastructure. what’s to stop Google, for example, establishing itself right across the european footprint, as it’s trying to do in the Us?

Baker: Commercially, a lot. we’re not stupid.

finnie: but there are four or five big operators in europe and it only takes one.

McManus: Those five operators want market stability. it’s not a cartel; it’s

common sense. Two years ago the mobile operators didn’t speak as much as they do now. The partnership that we announced between ourselves, everything everywhere and Vodafone for media and financial services is a fantastic example of the industry saying: if we don’t get our act together, this will disappear. That’s going to happen more and more. As an industry we have to have a platform to attract revenue and to compete with other industries. it’s like ticketing in the airline industry. if they’d continued to do their own ticketing, it would have been a disaster. so they decided to do ticketing as a platform. And that’s all we’re doing. we’re doing media and financial services as a platform for the industry.

van Bavel: nfC will only work if you build an ecosystem among all operators. it makes no sense otherwise.

McManus: we should stand back and take credit for the way the industry is evolving to meet the pace of change.

finnie: but there are content providers strolling into our territory saying, ‘we’re not regulated, because you can’t regulate content’.

McManus: i look at it really positively because it’s pushing us to be an over the top player. i have a team who do apps and we look at all sorts of things completely differently. The business model of apps is to give it for free so [the team leader’s] going about the business saying i want

John sims

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The telcos are innovating considerably more than a lot of the content guys

differentiates on always having the highest speed, [but] people don’t actually buy that. Once they’re customers, they’re very happy with it and as a result you have low churn, but it’s not at all for [customer] acquisition.

is there an opportunity to charge content providers using your networks to provide a better experience for their customers?

haines: At some pint, quality content will kick in. At some point sky subscribers will insist on the quality of the content they receive on any device and they will pay for it through their monthly subscription.

Baker: i wish we were going faster and having a good CDn strategy. That’s the next thing we should look at. if Google or sky or whoever wants to launch a high-quality service on my network, however the technical infrastructure works, why wouldn’t we charge them money to do that? we don’t go enough to these people and say we can offer you a really great differentiated service for your apps, for your services, for wherever else it may be, but you have to pay some money.

haines: if sky, Disney, all these people want to guarantee the quality of their product to me as an end user, they are going to have to work with an intermediary that has a CDn. so the big question is if.

Matt hatton: it’s diplomatic to say we will deliver you more if you pay us. we’ll provide you with a platform to provide a better service to your customers. rather than saying you’re hoovering up all our bandwidth, you need to pay us money.

could you benefit from providing a seamless mobile broadband experience internationally?

McManus: The biggest issue on data roaming is bill shock. but as prices come down, people are on facebook on the beach in Greece, whereas before they

glyn Baker

16 www.totaltele.com november 2011

to give voice for free! And it’s a really healthy debate. And i think you’ve got to give us credit for the pace at which we’re moving. we’re a big, lumbering, high-scale investment industry that’s moving a lot quicker than it did a year ago even.

finnie: There is a convenient polarisation from the media and analyst perspective to say that these are the reluctant regulated old telcos and you’ve got the new shiny content guys coming in and they’re driving the industry. The telcos are innovating much more than a lot of the content guys are who are largely waiting for the innovations to occur. we’re doing a lot of work in cloud computing. The big innovation is not the computing side, it’s actually on the network side. That’s where the clever smarts are. so i think we can blame ourselves for being hopeless at communication. Look at Amazon’s results. what’s the really, really profitable part of Amazon at the moment? The bit that’s blind, it’s the computing side which was a by-product of a bunch of people saying how do we deal with the Christmas rush? Let’s build cloud computing.

McManus: we should be much more positive about the evolution of this industry because we are in a phenomenal place. There are lots of people who want to be where we are, including the Googles and facebooks. And if we all work together and be positive, it’s boom!

Where are we seeing the biggest changes in the market?

McManus: Customer expectations are the thing that’s moving the quickest.

A customer of ours [with an iPhone] said, ‘i pay you guys £40 a month but i get nothing for it’. And that was a real moment for me. That’s where we get a bad reputation because we are seen to exploit the customer. And we need to work better at [marketing]. we, as an industry, have only just started to put the price up for the first time in 25 years.

Baker: in Austria we’re seeing the market adding things like service price in, so charging €20 a year just to have a contract. You’re right, prices are starting to stabilise. i think the operators are starting to fight back a bit now because we’re having to. How you manage subsidisation is clearly very important. what length of contract can you get away with? How do you ensure that people are getting what they need rather than what they think they need?

Wareing: i think part of that comment from the user who thinks they get nothing [for their £40] comes from the fact that everyone uses the same set of apps on a different device but largely does the same sort of thing with it. so if you were to unlock bandwidth for the user, that wouldn’t be something they’d necessarily pay a premium for, but would it be something that they would see as a point of differentiation?

McManus: i don’t think any of the UK operators can afford to build a network that differentiates them clearly from the rest. They can’t afford to be off the pace one way but they just can’t afford to push the pace the other way. i think value is going to be different. Value in

the industry, looking back, was about connectivity and being able to talk to people. Value, going forward, will not be about that. The £40 a month is the thing that says i don’t value connectivity anymore. The relationship between the mobile operator and the customer has to change. And that’s why we’re looking at financial services, we’re looking at media, we’re doing things like Priority Moments on O2. it’s all about creating a different value proposition that the customer wants to buy into because connectivity isn’t going to do it anymore.

Baker: but you can guarantee that the thing that will have most impact on net adds in Q4 will be who’s got the highest stock of the iPhone 4s. we had [the iPhone] in Germany. we were way, way ahead of the market. in the UK, it’s the people who got the iPhone first. And we see it in the Us. Consumers are clever but they’re still very attracted by bright and shiny objects.

haines: As a consumer, i’m really under pressure because i pay my £40 a month to O2, pay my £30 a month to Virgin or bT, pay my £30-£40 a month to sky... All of a sudden my communication and entertainment needs are costing me £150 a month.

finnie: everyone’s got the same 40, 25, 35 quid going in and out, wherever it’s going, so it’s a question of who’s going to sweep that up and who’s got the best access to that customer. why is internet banking so useful? because it’s convenient - i don’t have to go anywhere to use it.

McManus: The amount of money people will spend on mobile services is probably not going to go up but why can’t i have the money that they spend on financial services? why can’t i have the money they spend on health? There’s a whole set of industries all converging on the personal relationship with an individual. How do you exploit it? That’s the challenge.

Baker: [There’s an opportunity] with things like payment because it’s not visible.

derek McManus

dirk van Bavel

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november 2011 www.totaltele.com 17

when we were looking at payments a few years ago we didn’t actually want people taking money out of their £40 a month and spending it on other services because that eroded our margins. so we could get into more the nfC model, where we’re taking 5% of the transactional value from someone else, not from the consumer.

With users paying various sums to various providers for communications services, to what extent does mobile broadband fit into a bundle of services?

Wareing: The more products people take, the churn decreases. if we look back six or seven years, we were trying to target the highest ArPU customers, so premium content and as many services as possible. what we found was you just weren’t able to compete with sky on movies and sports. so the segmentation brought us back to looking at the mid-market that didn’t really want that premium content, but also saw all of these things as a utility. so it’s about bundling things together, if you can get it right with a single bill, a single online interface or platform, great customer service.

finnie: That’s the same with the enterprise; churn becomes harder if we’re not just selling one product; if they’ve got all their computing with us and they’ve got all their communications with us, then it’s just hard to shift. Users are driven by convenience, so if you’ve got a mobile device that has everything on it, it boils down to ergonomics then.

so is it simply stitching services together and providing a discount, a single bill and a single customer service?

van Bavel: i don’t think so. it’s about relevancy. in france we are bundling mobile broadband dongles together with ADsL. so it’s positioned as occasional on the move [usage] when you are not at home and it sells very well. it’s one of the biggest sales elements for the dongle business in france. we also tried to link it together with voice, but the sales people say it is just not working

because the customer doesn’t come with that mindset. in Austria where we have the smart siM, where the data bundle is shared among two siMs, it is positioned as the second siM for a tablet and then the bundle works again. so it’s all about the relevancy of the proposition.

Baker: That’s a good point. One of the trends that we’re seeing is, and this goes against the point of convenience, a bigger average number of devices per consumer. How do you manage the tariffing and how do you manage bundles and all those kinds of things? we want to be in every single device, but there are plenty of challenges to do with that, not least just on the good old billing side which is the biggest irritation we’ve all got.

van Bavel: but it needs to remain relevant. A Kindle also has a siM card in it but it makes no sense to try to get your siM card into that Kindle because the customer just doesn’t see the siM card.

Baker: One of the things about Kindle that’s made it so successful, within its market, is invisible pricing. You’ve got network connectivity but it’s just not visible.

sims: That goes back to your comments about financial services. when people are doing financial services and you’re getting a piece of it, it’s like the Kindle model; you get a piece of it but it’s going on invisibly.

McManus: The b2b2C [business to business to consumer market] is where you’ve got to go because almost every business has mobility as part of their strategy. And you can be the partner of choice and make that become real. Technology has never been easier to develop. funding it is a different matter, but developing it has never been easier. That’s the big opportunity.

Baker: so, anything where effectively we’re not the people who are taking the actual money, that’s the point. There’s £40 to spend on mobile and that’s it. The

more we can get out of service providers, whether it’s Google on the wholesale networks or whether it’s barclays bank or whatever, that’s where potentially there’s revenue growth.

hatton: One issue though is that those adjacent industries actually aren’t that big. we lose sight of how big telecoms has got. You think OK, if we can just take a proportion of the revenue coming from advertising, a portion of the money coming from the music industry, then it will lift it up. The music industry is a twentieth the size of the mobile industry so you could boost your ArPU by 5% if you took the value of every CD or DVD or whatever, sold anywhere in the world.

haines: but if your cost to serve it is purely incremental you could go for it.

sims: And it’s not just one thing. You’ve got to insert yourself across a lot of different industry segments, with financial services as an example, payments; these things cut across a lot of different industries.

McManus: The big opportunity is because of this thing [iPhone]. i know where i travel to, who my friends are, what my takeaway on a friday night is, what football team i support, what my buying habits are. i know everything about me because of this. That’s the opportunity because it’s here with me all the time. so it’s not looking at one industry; it’s about how do you take that and the relevance that you can provide, and how do you add value so the customer wants to have that relationship with you? The opportunity is massive. This is the only place, including Google and facebook and everybody else, where you know everything about what the customer does; the only thing. There isn’t anything else.

Baker: And don’t forget that those revenues you’re talking about might be small but there’s no network investment, there’s no customer service. so, another €10 million from Kindle or wherever, that’s good money, not bad money.

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18 www.totaltele.com november 2011

What is the biggest issue that network operators need to resolve in terms of delivering mobile broadband profitably over the next five years?

haines: in a word, monetising data usage.

Wareing: Differentiation. everyone is moving quickly but there’s no one that stands out with a really differentiated service proposition.

van Bavel: first of all, it’s about quality. Quality must increase because that’s an expectation. secondly further down the line it’s about the propositions that need to evolve. when the market becomes more mature, they need to become more segmented. And i think thirdly the biggest, in terms of differentiation, is evolving your brand relation and the interaction with your customers.

Baker: for me it’s simply about execution. Things like adjustment to the way that the financial processes within the business are working. it’s that simple. i think we know that what we need to do is just get on with it.

finnie: it is somewhat structural. if [the market] acted, even at an operator level, on a more continental, multi-region level, i think that would accelerate mobile broadband. from our perspective, it would be good if [the mobile operators] could act as an entity, as opposed to 20-something entities.

sims: To be able to get more share of wallet in a stealth way; not to get them to go from £40 to £45, but to get into the commerce streams that are happening and then, the Kindle model, be able to get in there in a stealth way, take a piece of it and increase your revenue share that way.

McManus: it’s experience, value and relevance. but for me the biggest challenge is the speed at which we can change the industry model. n

Why can’t I have the money that people spend on financial services? On healthcare?

pay again to use a service that someone else has provided for me to supplement the service that you haven’t provided. That model’s just not sustainable. i know there are other operators that use femto a lot more widely than we do, but it’s not catching the consumer’s imagination. wifi is [also] part of the solution.

Baker: wifi gives consumers the ability to press a turbo button in theory, a priority boarding button. You don’t quite know how long the queue’s going to be but it just gives you the opportunity to switch. i honestly don’t think we need to make it more complicated than that. Just give someone the ability to log onto this hotspot and we’ll bill it to your account. it’s really simple. but who knows how long [wifi’s] got because networks are going to develop at different rates.

McManus: when LTe comes in, will wifi as we know it now exist? Probably not. Customers just want to experience seamless connectivity. And i don’t think right now one player will be able to do all of it. Guys, you need to get your operating models sorted out, you need to work together to make this thing work because doing it on your own isn’t viable.

Wareing: The key challenge is that it’s going the same way as fixed. Knowing where you need to put demand at one time means you need a joined-up network strategy, fibre to macro cells and microwave is not the answer alone; you also need quick-to-deploy pico cells, small cells.

McManus: And that’s the big opportunity mobile operators have because they know what data is. And data is where data always has been. where people consumed data in the early days of GPrs is pretty much the same place they consume it today. it’s just the volumes have exponentially grown.

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Back to the Ran... When it comes to lTE, will we see full overlay coverage to 70%-80% of the population or will lTE be used for localised coverage and so forth? Where’s the balance between the two?

McManus: we haven’t had the licensing yet, but i think regulation in the UK will force a lot of that. but the days of cellular coverage being provided by things on rooftops have gone. Mobile networks will get data bandwidth into places where people want to consume it. You’ll have a contiguous macro coverage but you’ll provide data where it’s needed by getting a lot closer to the customer. small infrastructure can get data bandwidth to the point where it’s needed - small cells, femto, pico, it’s all the same thing. You will have a level of bandwidth geographically and the regulator will define that because

there’s a sliding scale of economics for population coverage and that has to be regulated.

haines: it will be a trade-off between what you pay for the licence and the coverage obligations really. There’s going to be a 5% gap in fibre coverage. LTe can provide the answer to that. You can provide [LTe] to the village pump, so you can provide the backhaul.

What about operator approaches to femtocells? is there an argument for the network operator getting femtocells into people’s houses or does Wifi do the job?

McManus: i think femto has a niche, such as for provision of wireless coverage for small businesses on the edge of a village or town. And it will be part of the portfolio of solutions that you provide to customers. but femto isn’t the answer. i still have a real problem with [the concept]: You haven’t built the network i need; you’re now asking me to

World Vendor Awards 2012Rewarding the architects of the communications industry

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5 millionMore households worldwide

could afford broadband if the price was cut by 1%.

(Point Topic)

TElEpREsEncE, VidEOcOnfEREncing EQuipMEnT gROWThRevenue from enterprise telepresence and videoconferenc-ing equipment worldwide grew to $683 million in the second quarter of 2011, up by 21% sequentially and by 34% year-on-year, according to figures from Infonetics Research. The company predicts the market will grow to $5.4 billion by 2015. Mutli-purpose room video systems make up over half the enterprise video equipment market at present and will continue to be the biggest revenue-generator going forward. The strongest demand for enterprise video equipment is from North America, China, India and Brazil.

un sETs nEW glOBal BROadBand TaRgETsinternet user penetration should reach 60% worldwide by 2015, according to new broadband targets laid out by the United nations’ broadband Commission for Digital Development; for developing markets the target is 50% penetration, while least developed countries should aim for 15%. The commission aims for 40% of households in developing markets to have internet access by the same date, driven by price reductions brought about by a combination of regulatory and market forces.

12.3% Microsoft’s predicted smart-

phone OS market share in 2012. (Strategy Analytics)

ViMpElcOM JOins MOBilE Big gunsThe consolidation of Wind Telecom propelled Russia’s Vimpelcom eight places up Wireless Intelligence’s mobile operator ranking by subscrib-ers in Q2 2011. With a customer base of 191.9 million customers, the Vimpelcom Group ranks sixth in the world, behind a top five whose positions remain unchanged from last year, despite significant customer growth. Operators from China and India are well represented in the ranking. China Unicom and China Telecom rank seventh and 12th respec-tively, while Bharti , Reliance, BSNL and Tata DoCoMo all make the top 20. India was also a major growth driver for Vodafone. Meanwhile in Europe, Deutsche Telekom slid six places to number 14, with a 2% decline in subscribers, and France Telecom dropped out of the top 20 altogether.

Source: Wireless Intelligence, company reports

Source: Infonetics Research

M2M cOnnEcTiOns TO REach 12 BilliOn By 2020The next decade will see a 12-fold increase in machine-to-machine connections worldwide, according to a new report from Machina research. M2M connections will hit 12 billion by the end of 2020, up from 1 billion at the end of 2010. Over the same period M2M revenue will rise to €714 billion from €91 billion, a CAGr of 22.9%. The addressable revenue opportunity for mobile network operators will be €210 billion in 2020, of which Machina research expects them to take €40 billion.

$707.4 millionGlobal Platform as a Service

(PaaS) revenue in 2011, rising to $1.8 billion in 2015.

(Gartner)

Rank Operator-group connections yoy yoy Mobile (mn)1 growth, change revenue connections rank (us$ bn)1 China mobile 616.8 11% - 20.32 vodafone group 367.4 15% - 15.53 américa móvil group 236.0 12% - 7.74 telefónica group 227.3 47% - 12.55 bharti airtel group 221.2 25% - 3.26 vimpelCom group 191.9 115% +8 4.67 China Unicom 181.6 16% -1 4.08 Reliance Coms 143.3 29% -1 1.09 telenor group 123.6 36% +4 2.710 mtn group 119.4 18% - 3.5

1 Connections are aggregated as the sum of each group’s subsidiaries where a minimum of 50% plus one share economic interest is held

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