Tarifica’s Daily Tracking Service

Tracking competitors’ promotions and pricing changes is critically important in today’s dynamic and fast-changing mobile industry, but gathering these details on a daily basis can be a difficult task that demands substantial time and resources.  Tarifica’s Daily Tracking Service addresses this challenge by providing a daily customized PowerPoint that captures and details every active promotional plan, device offer and price change in the client’s country.

Tarifica draws on its extensive experience in researching and analyzing mobile plans to highlight the most important details in an easy-to-read format so decision-makers get a clear snapshot of the market environment, thereby allowing them to react and implement new strategies accordingly.

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance. 


To learn more about Tarifica, please visit www.tarifica.com 

MTN Calls for Collaboration With OTT Players

African mobile operator MTN has called for collaboration between MNOs and over-the-top (OTT) players. MTN CEO Ahmad Farroukh, speaking at the AfricaCom event in South Africa, said that cooperation is required to develop a win-win ecosystem, as operators cannot be in complete control of the internet, and a broadband pipe that lacks appealing content and applications means little to end users. Farroukh said that mobile network operators and OTT players can either fight each other or opt to work in partnership to define access and structure a fair deal for both parties. He suggested, for example, that operators charge for value-added services and quality of service. Those that want a premium service will be willing to pay a premium, Farroukh said. He told delegates that mobile operators need to put a plan in place to avoid being forced into the role of providing a “dumb pipe,” investing to provide the network infrastructure while allowing OTT providers to own the customer and make money in the future. To be truly successful, according to Farroukh, OTT players and mobile operators have to each look beyond their own customer base and leverage global reach. He said that partnerships will play an important role in this process. Strategically positioned OTT players cooperating with mobile operators can also deepen the relationship between customers and the operator brand, build loyalty, reduce churn and help improve the customer value proposition. A little over six weeks ago, Ahmad Farroukh sounded a more combative note in remarks delivered to reporters. In late September, he characterized the relationship between OTTs and MNOs as “unfair,” in that the latter spend large amounts of money creating and maintaining mobile networks that OTTs then use to take business away from them. He criticized South African competitor Cell C’s decision to offer its customers free data for OTT messaging app WhatsApp, arguing that such a strategy amounts to giving away the store. Without giving specifics, Farroukh seemed to calling for MNOs to exact some sort of concessions from OTTs in return for access to their networks, without actually denying them access. Now, the MTN CEO appears to have backtracked to some extent, emphasizing cooperation and partnership between MNOs and OTTs rather than the application of pressure (a strategy that Tarifica also advocated in recent remarks delivered at the Pricing Mobile Data Conference in London). Perhaps he has come to accept that MNOs do not really have enough leverage to really fight OTTs and is urging conciliation rather than combat. However, reading between the lines a little bit, his latest remarks can be construed as being in no fundamental way inconsistent with what he said earlier. While cooperation and co-branding may help save MNOs from inhabiting the “dumb pipe” role, MNOs, Farroukh says, should nonetheless charge OTTs for “quality of service.” If they can indeed get OTTs to pay some sort of premium for access to premium network speeds and bandwidth, they will have made progress toward redressing the imbalance of fairness that Farroukh alluded to previously.

To Contact Tarifica: http://www.tarifica.com/contactus.aspx

Telus Makes Misleading Speed Claims

Following a hearing with the CRTC, Canada’s mobile regulator, on whether new regulations on the sale of wholesale mobile service would stimulate competition, MNO Telus issued a press release arguing against the regulations. The operator stated that Canada’s relatively high prices are merited and ultimately provide consumers with much better value. “Canadians enjoy wireless data speeds that are the second fastest in the world,” the release said, adding that Canada has “three times the average speeds offered in the U.S. and France, and nine times faster than the U.K.”

There was, however, a significant problem with the statistics that Telus cited, which was instantly flagged by Canadian media and industry watchdogs: They are based on the operator’s advertised maximum download speeds and not its real-world performance. As a warning against this type of usage, the OECD report from which Telus’ numbers were pulled stated, “Operators in some countries advertise faster speeds closer to the theoretical maximum which are rarely achieved in real usage.” As an example of how different these numbers can be, Akamai Technologies’ State of the Internet report for Q2 2014 states that Canada’s average download speeds were 7 Mbps compared with 6.1 Mbps in the U.K., not the nine times faster that Telus reported. 

We generally concur with Telus in terms of the broader argument that many of the European regulatory measures aimed at keeping costs down for consumers have inadvertently created a perverse set of incentives for operators in which maintaining current prices takes precedence over building next-generation networks. However, Telus’ tactics in this case have been almost comically poor. Due to MNOs’ large size and bureaucratic culture, many journalists and consumer advocacy groups are inclined to paint them as enemies of the consumer that consistently prefer “profits over people.” By manipulating the data in what appears to be the most translucent manner possible (there are multiple well-known and free sources for average download speed), Telus has validated all the fears of MNO cynics and moved popular opinion in the exact opposite direction to that which it intended. As this debate over competition continues in countries around the world, MNOs and their supporters would be well advised to not overreach in the way Telus just did. 

“Consumers tend to have little ability to evaluate network speeds. Most do not know how many megabits there are in a five-minute video. Instead of just listing theoretical maximum speeds, operators should differentiate their plans by describing speeds in practical and concrete terms, for example: ‘Now you can watch Game of Thrones anywhere; on our LTE network, 70 percent of videos stream with no lag.’ This strategy can help operators upsell consumers to higher-speed data packages and strengthen the brand’s association with reliable and fast data performance.”

Will Watts, Program Manager at Tarifica

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx

Sigfox in €50 Million Fundraising Drive

Sigfox, the French Internet of Things (IoT) company, reportedly plans to raise €50 million (US $63 million) to help fund its cellular network using unlicensed spectrum. In March 2014, Sigfox raised €15 million (US $20.6 million) to accelerate its network deployment in several European countries. Currently, its network is present in France, Spain, the Netherlands, Russia and the U.K., with a smaller network in place around the U.S. city of San Francisco. The company uses ultra-narrowband technology to connect devices using unlicensed spectrum.

Mobile operators have been investigating a diverse range of access technologies for M2M and IoT connectivity. Current obstacles include the lack of a single standard, requirements for energy consumption and channel spacing, security, and regulations on unlicensed bandwidth. Availability is another issue, as certain bands may only be available in certain regions. Incumbent mobile operators could leverage their extensive infrastructure and combine wide-area technology for accessing hubs and short-range technology for local access. The question is, will incumbent operators partner with companies like Sigfox—as Albertis Telecom did in Spain by deploying a dedicated 0G network (Sigfox’s term for its narrowband network)—or use their existing networks and complement them with narrowband technology?

Sigfox claims it can reach half the world in the next two to three years using its 0G network. So the debate continues—does the IoT need a new, tailor-made network with low energy consumption and simplicity of use, or can operators find a way to leverage their current networks in tandem with low-profile antennas and other narrowband equipment to address the congestion issues plaguing the industry today?

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx

STC Offers The Highest Value Plans in Saudi Arabia While Mobily and Zain Tie for Second Place

Tarifica has announced the latest Tarifica Scores for postpaid mobile plans in Saudi Arabia.

The Tarifica Score™ is a proprietary algorithm used to evaluate mobile plans based on the value they offer consumers. It incorporates every aspect of each mobile plan (including usage allotments, geographic coverage, data speeds, value added features and promotional elements) and weighs them against each plan’s total costs to determine its consumer value. Scores range from 0 to 100.

“STC’s Postpaid 400 plans have the highest overall score in both the ‘without phone’ and ‘with phone’ categories,” said Jamie Davella, Tarifica’s Saudi Arabia Analyst. “In the without phone category, STC won because of its faster download speeds, while its with phone plans came out on top in that category because of their lower device charges. Interestingly, Mobily’s best overall plans (Wajid Extra) have more voice and text allowances than STC’s top plan and somewhat lower monthly fees but these attributes do not outweigh Mobily’s slower network speed and higher phone costs,” she continued.

Mobily and Zain are virtually tied for second place in the overall best plans category, scoring 94 and 93, respectively, among plans without phones, and 83 and 82, respectively, among those that include one.

Each operator wins its share of top honors for plans segmented by monthly charge. In fact, Mobily has the best plans in four of these subcategories while Zain wins in three and STC in two, indicating that the market is very competitive. Zain also wins the competition for offering the highest data allotment with its 1 Terabyte Package XTRA plans. Since the Tarifica Score uniformly cuts off all data allotments greater than 10 gigabytes in order to conform to most common usage patterns, plans with this extremely high volume of data did not win in either the overall or price-specific categories.

“In today’s mobile marketplace, consumers are flooded with hundreds of plan variations and constantly shifting promotions and deals—the majority of which come with different costs and services and access networks of differing strengths. When making a decision that will likely impact them for up to two years, consumers can use Tarifica Scores to cut through the clutter and identify those plans in every market segment that offer the best value for the money,” stated Tarifica Program Manager, Will Watts.

Ken Dolsky, Senior Program Director at Tarifica also commented on the market intelligence value to operators. “We see great interest in the Tarifica Score among mobile operators. Users gain access to our proprietary model which enables operators to design plans that score high in consumer-friendliness and value. They are also able to quickly see, in quantitative terms, the impact that competitive changes have on the market. In the case of Saudi Arabia, STC’s best plan scored six points better than Mobily’s best plan among those without phones but when its lower priced phone advantage was included it increased the gap between them to 17 points among plans that came with a device.”

To Contact Us: http://www.tarifica.com/contactus.aspx

Orange Poland Launches Orange Finance

On 2 October, Orange Poland, in partnership with Polish bank mBank, launched a mobile banking service called Orange Finance. Orange and mBank customers will be able to conduct banking business via their Android and iOS mobile devices (Windows Phone is not currently available) and also get access to credit at competitive rates, according to the operator.

In the highly competitive Polish mobile marketplace, mobile banking is a very legitimate way for an operator to gain some advantage and boost its efforts at customer retention and acquisition. Mobile banking, which is thriving in developing countries, has been gaining ground in Europe, particularly Eastern Europe. In March 2014 in Romania, Vodafone introduced M-Pesa, the world’s largest mobile money network, which started in Africa. In Poland currently, MNO Polkomtel offers banking services in conjunction with Plus bank, while T-Mobile Poland does the same with Alior Bank.

Of course, in addition to market advantages, Orange Finance stands to bring in significant revenue for both Orange and mBank. Orange Poland has a customer base of around 15 million, and mBank has 8 million customers. Orange Poland CEO Bruno Duthoit stated that after three years the service is expected to generate “the equivalent of several percent of our current total revenue.”

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx

The Case for Designing Data Plans in Concert with Messaging OTTs

Since coming to popularity, Over-The-Top (OTT) services have proved a serious challenge for mobile network operators (MNOs). These internet-based services ride on top of operators’ networks, and those that offer free or reduced-cost messaging or calling compete directly against operators’ core sources of revenue. OTTs are a threat to the foundation of the traditional MNO business model. This challenge is driven by two factors: First, OTTs have the capacity for rapid, viral growth—services can rise quickly and add users at a pace that changes a market’s fundamental dynamics before MNOs can execute a strategic response. Second, these services tend to significantly reduce operator revenues—the increased data usage from OTT messaging does not even come close to making up for the loss of SMS and voice revenues. It is estimated that, on average, SMS messaging generates 50,000 times more revenue per megabyte than data usage. Given the ever-expanding number of services that OTTs provide and the popularity of these services, the ultimate conclusion of this trend could be the so-called “bit pipe” scenario, in which all industry innovation—and profits from that innovation—move to external players and MNOs are effectively transformed into utility companies that sell mobile data access. In this scenario, data becomes a commodity with ever-decreasing returns, and MNOs are only able to differentiate their services on the basis of network strength, speed and price. Understanding the stakes of this existential threat, MNOs have tried many strategies to mitigate the effects of OTTs, slow their growth or recreate OTT offerings under MNO auspices. All of these strategies have either not achieved the scale needed for replication or have failed outright. Given the magnitude of the challenge facing the industry and the inability of conventional options to address it, it is time for MNOs to embrace a radical solution—moving away from plans structured around  voice and SMS features and partnering with OTTs to build plans that leverage the strengths of both OTTs and operators. Tarifica believes that MNOs should embrace a strategy of partnering with selected OTTs and building targeted plans with them. This approach offers operators three critical benefits:  Marketing Enhancement—MNO/OTT plans provide significant branding advantages to operators by linking mobile services with “trendy” companies and providing operators with the ability to advertise the real-world benefits of these services—such as advertising WhatsApp messaging, Skype video calling or Spotify music streaming—rather than the abstract concept of data, which is often hard for consumers to grasp. New Revenue Stream—While OTTs have excelled at customer acquisition, many have not yet identified how to monetize this huge base of users. Critically, many lack a fluid, in-app solution for selling users premium content. This opportunity pairs well with MNO strengths and needs alike. MNOs can offer partner OTTs direct-to-carrier billing, which would provide users with an instantaneous and seamless means of paying for services. For operators, this would provide a tie-in to a new and expanding source of revenue. Reduction of Tensions With OTTs—By establishing a shared revenue source with OTTs, MNOs will create a direct channel to some of the most dynamic actors in the market and, ultimately, foster a climate of mutuality with these actors in which all have strong incentives to build a future environment where both entities will flourish. MNOs that succeed in this new frontier of mobile offerings will likely operate under several guiding strategic principles as they adjust to this significantly different environment.  First, any new plans created will offer significant revenue upside for operators—whether through decreased churn, increases in existing revenues or new opportunities. Operators that enter this arena halfheartedly without a clear understanding of OTTs and a specific strategy for how to leverage their strengths will be unlikely to have any success. Second, successful operators will create plans that are truly symbiotic and sustainable for themselves as well as for the OTTs involved. Many MNOs will be tempted to push for substantial concessions from partners that will undermine the core of the OTT business model. These plans will be rejected by popular OTTs and leave these MNOs working with inferior partners. Finally, successful operators will act decisively to forge new partnerships and bring these plans to the market. As noted, OTTs excel at identifying market needs and adapting rapidly in order to provide new services. To succeed in this environment, MNOs need to emulate this culture of institutional nimbleness. The success of these kinds of initiatives will depend on capturing fleeting market opportunities, and the most successful MNOs of tomorrow will be those that adapt institutionally and embrace the expectation of rapid change. This article is an excerpt of a presentation given by Tarifica at the Pricing Mobile Data Conference in London. For specific examples of plan types that are well suited for partnering with OTTs, deeper analysis of the current market conditions or further information on any point in this article, please visit: http://bit.ly/1sSgB8D to view the full Tarifica presentation.

Notable Regional Developments

Asia/Pacific

Australian operator Telstra has signed a network-to-network interconnection (NNI) agreement with Indian operator Tata Communications to use Tata’s 116 points of presence (PoPs), as a way to extend Telstra’s reach into the country’s tier II and tier III (smaller and minor) cities, such as Jaipur, Surat and Trichy. This agreement increases Telstra’s access to more than 2,000 PoPs in 230 countries and territories and positions it as one of the most scalable networks across the globe. The initiative augments Telstra’s strategy to include NNI agreements in emerging countries that are showing signs of growth and an increased demand for connectivity.

Europe

France mobile operator Orange’s Business Services unit is partnering with electric car manufacturer Tesla Motors to provide wireless connectivity to drivers of Tesla’s Model S cars in France. Through Orange’s mobile network and SIM cards, consumers can experience connected-car features such as interactive navigation services, internet radio, web browsing, seamless remote diagnostics and over-the-air updates of M2M software.

Latin America

Argentina’s telecoms ministry SeCom announced that the country’s local operators Claro, Personal and Movistar as well as multimedia company Grupo Uno are prequalified to bid on 4G spectrum in the 31 October auction. The government expects to award 90 MHz of spectrum in both the 700 MHz and the 1,700/2,100 MHz bands.

Middle East/Africa

Vodacom Business, a subsidiary of the Vodacom Group that provides connectivity and telecommunications services to businesses, has introduced cloud solutions to its Nigerian customers. Due to security concerns, only a third of businesses in Nigeria are currently using cloud technology. According to Vodacom, its enterprise-class cloud and hosting solutions provide businesses with a secure and reliable IT infrastructure.

North America

U.S. MVNO Kajeet will provide affordable mobile broadband coverage via Sprint’s network to 2,000 additional U.S. school districts, an increase over the 37 districts that Kajeet originally partnered with in the project. Through this connectivity, students are able to access online textbooks, apps, emails, documents and websites. The schools are also providing students with the Kajeet SmartSpot solution, a portable Mi-Fi mobile hotspot to ensure connectivity for students outside of the classroom.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx

A Selection of Pet Peeves from Mobile Phone Users

• "I want plans that can be customized"
• "I want a better data plan"
• "I want a good roaming plan"
• "I want better plan flexibility"
• "I want a shorter contract length"
• "We need cheaper, quality smartphones"
• "I want to be able to upgrade whenever I want"
• "I want a good data bundle"
• "There's too much time to wait when I need to upgrade"
• "I would like better coverage"
• "I'd like to be informed about my data usage"
• "I'd like a better data plan"
• "I'd like to be able to hold calls."
• "I want to unlock my SIM card for domestic use after my contract expires"
• "Data packs are too expensive"
• "The spectrum used is unable to penetrate buildings"
• "Terrible customer service"
• "It's difficult to monitor my data usage"
• "Don't like the 12 month permanency"
• "I hate waiting 2 years for an upgrade"
• “Dislike roaming charges”
• “I don’t like being disconnected from the internet”
• “I hate a fluctuating network”
• “My internet speed is too slow”
• “I’d like to bundle my land-line, cable and mobile into one bill”
• “I want a prepaid plan with device options”
• “There’s very little data at 3 Gigabytes”
• “I don’t like the taxes and roaming charges”
• “I want apps that work on Android, iPhone and Windows just the same”
• “Insurance is too expensive”
• “I want a better choice of servers”
• “I want to know if my service is throttled”
• “I want coverage reliability”
• “I do not like the trade in rules”
• “I think the voice quality is not good”
• “I don’t like the pre-installed apps”
• “I want a faster network”
• “I want better security”
• “I want a better selection of phones”
• “ I don’t like contracts”

Source: Tarifica’s 2014 Global Survey of Mobile Users

CEO Says Vodafone Could Bid for Liberty Global After 2015

Vittorio Colao, the CEO of U.K.-based Vodafone, said in an interview that he would consider acquiring cable giant Liberty Global if the price was right. Speaking at a Goldman Sachs presentation, Colao said that Vodafone could participate in a transformational M&A deal in the future, adding that the company would be in a stronger position to make such a deal after it completes its €19 billion (US $24.6 billion) Project Spring investment strategy, which is expected to run through March 2016.

With the rise in popularity of quad play bundled services in Europe and other sophisticated markets, mobile operators are searching for opportunities to offer fixed broadband and TV services alongside their traditional telephony and mobile data. Vodafone has been increasing its fixed line footprint lately by making acquisitions—last year it bought Kabel Deutschland and this year added Spanish cable operator Ono to its holdings. Liberty Global, for its part, sees the benefits of the same synergies, as it has entered into resale agreements with mobile providers. It is also on the hunt for more fixed line capacity, as evidenced by its agreement earlier this year to buy Dutch cable operator Ziggo. In fact, Vodafone’s acquisition of Kabel Deutschland came at the expense of Liberty, which was beaten out for the deal.

In today’s climate of saturated markets, ever-tighter competition and decreasing mobile ARPU, offering cable services is becoming more of a necessity than a choice for MNOs. While Vodafone has not entered into any discussions yet, Liberty is a particularly appropriate choice for a deal, given its size and value of US $33 billion. Colao’s statement, while far from definitive, is a good indication that a Vodafone-Liberty merger attempt is eventually likely, if not imminent.

 

“If Vodafone does indeed merge with Liberty Global, the resulting entity could be the king of quad plays in the European market—a highly desirable thing to be in this era of increasing demand for such offerings. It only remains to be seen whether Vodafone will take its pattern of snapping up broadband companies to its logical conclusion.”

Serge Fisun, Research Analyst at Tarifica

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx

MTN South Africa CEO: No “Free Ride” for OTTs

Ahmad Farroukh, the CEO of MTN South Africa, in a conversation with reporters this week characterized the current relationship between OTT service providers and mobile operators as “unfair”—meaning that MNOs spend huge sums of money creating and maintaining mobile networks, which OTTs then use to take business away from them. In particular Farroukh expressed skepticism about competitor Cell C’s decision to offer its customers free data for the popular messaging service WhatsApp (as a promotion next month). “We are not saying we have to deny OTTs access, but the OTTs should be fair,” he said. “This access has a cost.” Farroukh says that while he does not believe that the cost should necessarily be paid directly by the OTT providers, some kind of global-level must eventually be worked out, perhaps through the GSMA, the organization that represents all mobile operators. Writing in these pages about the developing OTT challenge, we have often stressed the need for MNOs to accept the inevitability of OTTs’ appeal to consumers and do their best to embrace the phenomenon rather than fight it. MTN, for one, is most decidedly not taking that approach. Farroukh is right to draw attention to the imbalance in the equation whereby operators make all the investment in the networks without which OTTs cannot function, while the OTT players themselves make none. Farroukh’s pugnacious attitude is apparently shared by a number of MNO decision-makers; he recalled a recent forum in Dubai at which representatives of international operators and OTTs almost came to blows. What action could be taken by MNOs that want to fight? While OTT executives have gone on record accusing MNOs of restricting freedom of expression, Farroukh is not suggesting that mobile operators ban OTTs from their networks. Such a policy would be difficult to implement in any case. Nor is he insisting that MNOs try to get OTTs to pay for access on an operator-by-operator basis. Wisely, we believe, he is simply urging his fellow MNO executives to work together to put pressure on OTT players—which after all are fundamentally dependent on mobile networks—to reach some sort of agreement, presumably to defray the costs of infrastructure development or otherwise even up the ledger book. What form that arrangement will take is still unclear, but if the Farroukhs of the mobile world get their way, operators will be able to do better than simply collecting revenues from OTT-induced data consumption. The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx

Denmark’s TDC to Launch Unlimited Business Calls in Europe

Danish operator TDC has announced that beginning in October, its new mobile offerings will enable employees of small and medium-sized businesses to make unlimited calls while roaming in any of the Nordic countries as well as in all countries in the EU. The plans also include unlimited SMS. Business customers that purchase TDC’s higher-end plans will also be able to call international numbers at no cost.

According to the economic survey presented in August by Denmark’s minister of economic affairs and the interior, Margrethe Vestager, Denmark’s economy is moving in a positive direction, though there may be fluctuations along the way as the country bounces back from the economic crisis of 2008. However, even in this improving environment, it appears that customers are very budget-conscious, causing the country’s operators concerns about generating revenue as they devise plans to attract new customers and retain existing subscribers, particularly in the business sector.

TDC’s new offers seem like a good way to accomplish these goals and to compete with services from OTT providers, which business travelers are also using when roaming. We are not surprised that Telia, the country’s third-largest mobile operator, has also just announced new plans with unlimited calls and SMS for business subscribers traveling in the EU, Nordic countries and Baltic countries. The two operators appear to have similar offerings, so most likely this is an attempt by both to keep their heads above water in Denmark’s current economic climate rather than an indication of one player making aggressive moves to shake up the market substantially.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx

Cellcom, Golan Telecom Seek to Submit Joint 4G Spectrum Bid

Israeli mobile operators Cellcom and Golan Telecom have asked the country’s minister of communications (MOC) and minister of finance for approval to jointly bid in the country’s spectrum auction, which should occur in early December. The operators are protesting terms of the auction that require them to bid separately, saying that their existing network-sharing agreement is justification for the joint bid. Both MNOs have stated that the auction’s requirement that they each hold 20 MHz of spectrum will force each of them to pay much more for spectrum separately. The joint bid reportedly has been rejected by the MOC, which has also agreed not to set a time frame on when each operator must have its 4G network deployed.

While Israel’s first 4G spectrum auction is said to be set for this upcoming December (there has been talk of such an auction occurring since 2007), the country’s mobile operators were provided temporary access to 4G LTE frequency bands in July. At the time, each provider was able to request two 5 MHz blocks of spectrum. In the auction, a total of 65 MHz of spectrum in the 1800 MHz band can be bid on by the operators in blocks of 5 MHz each, at a starting price of ILS 10 million (US $2.8 million) per block. Israel’s largest and second-largest operators, Cellcom and Partner, can obtain up to two blocks, while the smaller operators can win up to four.

Israel was one of the first countries to offer 3G service in 2000; however its adoption and deployment of 4G has not been nearly as rapid. According to a statement by the MOC, Israel does not have enough 4G frequency bands to support all of the country’s operators, and due to the high cost of developing frequencies, it will allow MNOs to share networks. Conversely, the MOC will not agree to joint spectrum bids because it fears this would set a precedent and open the way to a joint bid by Hot Mobile and Partner, Israel’s other major operators. Additionally, the MOC would like to use the auction to bring new players into the market, and it fears joint bids may prevent that from happening.

While it would appear that the MOC has denied the request as a way to ensure fairer competition for smaller new players, its actions may actually bring about the opposite result. If claims made by Cellcom and Golan Telecom are correct, the MOC’s rejection of their request will result in some providers having more than 20 MHz of spectrum, of which the overage will need to be returned and rebid on. The ensuing prices will then be higher, due to the smaller number of frequencies available.

Decreasing competition through joint spectrum bids has been of concern in other global regions, as well. In the U.S., it has been reported that the regulator, the Federal Communications Commision (FCC) circulated a proposal in August that would bar mobile operators Sprint and T-Mobile from creating a joint venture to bid for spectrum in the 2015 auction of the 600 MHz broadcast TV spectrum. According to FCC wireless bureau chief Roger Sherman, the change to these rules, which were written in the 1990s, will ban national carriers from bidding together, although smaller wireless providers can continue to do so.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx

Consumers Want to Access Home Devices Via Mobile Phones

Orange Offers to Buy Jazztel

French multinational telecommunications company Orange has made a €3.4 billion (US $4.4 billion) cash offer to acquire Spanish broadband provider Jazztel, valuing it at €13 (US $16.83) per share, which Orange said was 22 percent more than Jazztel’s closing price on the Madrid exchange on 12 September and 34 percent more than its average price over the past 30 days. The deal is subject to regulatory approval, and also to Jazztel’s shareholders tendering at least 50 percent of the stock, on top of an almost 15 percent stake held by executives—including chairman Leopoldo Fernandez Pujals—who have agreed to sell. This acquisition move, which had been rumored since February, would be Orange’s biggest such attempt in nearly a decade and would allow the operator to provide converged fixed and mobile services in Spain. It would thereby place Orange, currently the third-largest MNO in Spain, in a significantly improved position relative to its chief rivals, Telefónica and Vodafone. (The latter company acquired a broadband provider of its own, Ono, in July.) If the deal goes through, Jazztel would bring with it 1.5 million broadband subscribers, causing the resulting entity to be the second-largest broadband provider in Spain. Orange clearly hopes that the acquisition will boost it to the number-two spot among Spanish MNOs, as well. It projects that a takeover of Jazztel would generate revenue and savings amounting to €1.3 billion (US $1.68 billion). “Orange and Jazztel together, that’s the combination of two success stories in Spain,” said Orange CEO Stéphane Richard. “With the economy recovering, it’s the right time to reinforce our presence.” There is a pre-existing synergy between the two companies—Jazztel also offers MVNO services which run on Orange’s network, and it would bring a further 1.5 million mobile customers with it. Fixed-mobile convergence is an active trend in Europe, as well as in other developed markets where competition is intense, and Orange is clearly embracing it in its search for a competitive edge.

The above item appeared in a recent issue of Tarifica's "The Story of The Week", a weekly report that analyzes noteworthy developments in the telecoms industry from around the world. For past issues or to learn more about The Story of The Week :  http://www.tarifica.com/storyoftheweek.aspx