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A round-up of some of the major stories from Mobile World Congress 2013 www.totaltele.com

Taxing times: Executives ask whether it is possible for most mobile operators to turn a profit in Africa

Call to arms: The world’s biggest telcos urge regulators to allocate spectrum in a manner that encourages investment

View from the top: Key quotes from MWC 2013 show that telecoms operators the world over face the same challenges

Dates for your diary and details of the must-attend events in the telecoms industry over the coming months

news & views business technology geography events

it took a little time for regular Mobile World Congress attendees to get

to grips with the new venue for 2013 (pictured), but once the event proper got under way it quickly became apparent that in many ways not much had changed.

The telco executives that took to the stage in the auditorium had a common message, one they had shared before: mobile operators

need more spectrum and less regulation (p.9). Interestingly, this year there were similar complaints from operators representing Africa with some big names expressing concern that the continent will follow the same path as that taken in Europe in recent years (p.7).

And naturally there was talk of whether or not over-the-top players should pay their share for the

networks they use. “No!” was the resounding answer from that side of the fence, although revenue-sharing could be on the cards (p.5).

There were new develop-ments at this year’s MWC, including various smart-phone launches, the arrival of the Firefox mobile OS, AT&T’s M2M deal with General Motors, and the unveiling of Qtel’s new brand Ooredoo. For more on those stories and all the news and debate from MWC 2013 read on. Click on the symbols when you see them to read more online.

Mary Lennighan, editor mary.lennighan@totaltele.com @TelecomEditor

The mobile industry’s biggest event moves to a new home, but the key issues remain the same

scene shiftmobile world congress 2013

mwc2013 out with

the old72,000 people descended on Barcelona in February for the new-look Mobile World Congress. Read on for all the news and views from the event

A round-up of the major stories from Mobile World Congress 2013 as reported in our daily news service www.totaltele.com

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Profiting through the network

networkingVerizon Wireless was looking for international LTE roaming deals at MWC. The telco also explained how its LTE network will keep it ahead of its US rivals.

4g’s no curse SK Telecom reacted angrily to suggestions that it views LTE as a “curse” because of the associated costs. 60% of its customers will be on LTE by end-2013, it says.

think local Tailored content will bring mobile users in emerging markets to new devices and services, according to Ooredoo, Bharti, Nokia and Mozilla.

back to school Cable & Wireless Comms shared its views on customer experience, including the belief that mathematicians often do a better job of analysing operator data than industry specialists.

in brief big news

i want a new nameQatar’s Qtel has renamed itself Ooredoo in a bid to bring all its international businesses under a single brand identity.

“From this moment on we are Ooredoo,” chairman Abdullah Al-Thani announced at Mobile World Congress, explaining that the new name means “I want” in Arabic.

“This name signals our aspiration and commitment to becoming a global force,” Al-Thani added. “This is more than just a change of identity for us,” he said, emphasising the telco’s renewed focus on customer experience and involve-ment in social responsibility initiatives such as spreading education and involving women in the digital world. Indeed, its rebrand event included presentations from ITU secretary general Hamadoun Toure, barrister Cherie Blair, and Argentine footballer and brand ambassador Lionel Messi.

“Welcome to Ooredoo, a brand and a communications company that stands for human growth,” Al-Thani said. Qtel will adopt the Ooredoo brand in its home market, as will its international subsidiaries, including Indonesia’s Indosat, Wataniya in Kuwait and Tunisiana.

“[Ooredoo] reflects and conveys our approach to custom-ers,” said Al-Thani. “It’s a new name to unite the entire group.”

this name signals our aspiration and commitment to becoming a global force

the web itself is the ultimate leVeller of the plaYing field

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in brief

newcomer

big dealso2 lte contractEricsson announced it has won a deal to supply 50% of the radio access equipment for O2’s UK LTE network and 100% of the evolved packet core.

liquid applicationsNokia Siemens Networks unveiled its new mobile CDN offering Liquid Applications and revealed that SK Telecom will evaluate it during the first half of the year.

eYes on the skiesAT&T brokered a deal with freight monitoring specialist OnAsset Intel-ligence that will enable it to monitor in-flight cargo.

ericsson, sap tie-up Ericsson and SAP brought their respective skills to a partnership that will see them jointly sell cloud-based M2M services to enterprises. The pair will sell to businesses only via the operator channel.

outfoXing the establishmentMozilla CEO Gary Kovacs demonstrated the Firefox smart-phone operating system in Barcelona alongside some of the 18 global mobile operators that have pledged to support it.

The new open standards-based OS will run on lower-spec devices than existing smartphone platforms, meaning it will be a valuable tool in bringing smartphones to a greater proportion of the world’s mobile users. But more than that, it gives mobile operators a greater opportunity to participate in the smartphone value chain and could break the stranglehold Apple and Google have on the market at present.

An HTML5 device will “enable everyone around the world to participate in mobile,” he said. “The Web itself is the ultimate leveller of the playing field.”

Firefox will make it easier for users to get access to all kinds of content and applications, Kovacs pointed out. It’s not about having one or two companies approve every piece of content: “that’s a broken model and it needs to change.”

“It’s going to provide a lot of flexibility for the operators,” said Qualcomm CEO Paul Jacobs. “This is going to provide a very, very large ecosystem.”

90% of all mobile cells will be

small cells bY 2016

(Small Cell Forum)

learning curVe Huawei revealed it is learning from Apple to make its Android devices as simple as possible as it announced its newest smartphone, the LTE Cat 4 Ascend P2.

lte-a phone in pipelineSK Telecom said it is in talks with a number of device makers over handsets that will run on its LTE-Advanced network, due to launch later this year.

carrier aggregation near Qualcomm predicted that the first deployments of LTE-A carrier aggregation will come in the second half of 2013.

Zte’s new deViceZTE unveiled the LTE-ca-pable Grand Memo, but also admitted it has some way to go to bridge the gap between itself and its tier-one smart-phone rivals.

phone swap Handset refurbishment specialist eRC revealed it has saved Sprint $1 billion in less than four years.

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big news

people maY question the need for connected car serVices

in brief

all about automationVodafone explained that it is keen to keep human intervention to a minimum when it comes to supporting machine-to-machine (M2M) customers.

greY pounds European telcos are missing out on revenues from the over-55s by not providing appropriate smartphones, Fujitsu warned.

Virtual destinY Telcos must become part of the virtual goods market in order to survive, said KT CEO Suk-Chae Lee, describ-ing it as “our destiny”.

managing partners EE CEO Olaf Swantee described the difficulties of forming industry partner-ships, not least because of the “egos involved”.

spectrum shortage Mobile operators in Latin America are suffering as a result of regulatory moves to “customise” spectrum auctions to boost competi-tion, said 4G Americas.

17bn annual roaming reVenues missed

bY mobile operators

(Syniverse)

industrY opinionkiller cloudsTelcos that want a simple way to win customers and generate revenue from cloud services could do worse than opting to resell an off-the-shelf product from a respected software provider. However, Japan’s NEC said this method comes with a health warning.

“Operators sometimes ask us for killer apps from some big brands...We advise them to get some big names, but we also say don’t rely on them too much,” said Manuel Gallo, senior manager of business development for EMEA, at NEC’s cloud competence centre. “You won’t build customer loyalty or retention from killer apps like [Microsoft] Office 365 because they’re available everywhere and you will always find yourself challenged on price.” Instead, he advises telcos to create sticky services that become an integral part of their customer’s own business: “I sort of call it forced loyalty.”

In its capacity as a carrier cloud services provider, NEC’s brand is the one thing largely absent from its offering, since it provides solutions under white label. “The NEC brand is well-established in the carrier cloud [services] market, but we don’t want to undermine the brands of our opera-tor customers,” said Gallo. “There are sometimes internal concerns that our brand is not listed in cloud service rankings, but I always think, would I rather have the money or the brand? I’ll have the money please.”

are we there Yet?General Motors will equip the majority of its new vehicles with LTE from 2014, with AT&T providing the network connectivity in the US and Canada.

“No other company is bringing connectivity to this many vehicles,” GM vice chairman Steve Girsky announced at Mobile World Congress. “All of GM’s brands in Europe will be full beneficiaries in the near future,” he added.

As well as a connected car-type M2M service that moni-tors the vehicle and a dashboard information centre, the deal also covers in-car infotainment services. Girsky talked up the potential for in-car infotainment, navigation, and safety services; however, for that potential to be realised, “a broad base of partnerships” is required, he said. GM and AT&T aim to foster an application ecosystem around connected cars.

“People may question the need [for connected car services] at first,” Girsky admitted. “But it doesn’t take long for people to move from ‘I’ll never need that’, to ‘I can’t live without it’.”

come and get itFor the past couple of years over-the-top communications and messaging providers have been considered a threat to mobile operators’ revenues, but at a conference session at Mobile World Congress, one of the big OTT names called for carriers to work with it and take their share of the revenues.

30% of our future revenues are up for grabs by carriers, said Talmon Marco, CEO of OTT messaging specialist Viber. “Come and take it,” he urged the operators. However, there is a caveat: “We’re not making any money today,” Marco said.

Those revenues will come if and when Viber is able to charge users for certain services and requires a billing partner. “We’re definitely prepared to share revenues when we charge users because we need someone to process the billing,” Marco said. Viber could do that through a partner like Google or Mastercard, but it “had might as well be” the companies whose networks it is using, he pointed out.

Viber now has more than 175 million users for its services that run over telecoms operators’ networks and threaten their own revenues. But is it willing to pay for using those net-works? “No!” said Marco.

But it is keen to work with the telcos in other ways. “I would love to offer our users Viber calls at a high quality,” Marco said. “Some of our users may be willing to pay for it.” He confirmed that Viber is in talks with a number of telcos and will announce “some pretty cool things” later this year.

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we’re definitelY prepared to share reVenues

In the meantime, it has signed a partnership with Indonesian mobile operator Axis that will let its customers buy a Viber service rather than a full data plan. “We’re helping Axis get its users into the IP world,” Marco said.

Telcos need to work with Viber and other OTT players in order to provide the innovative services consumers want, Marco insisted. “If you’re working for a carrier and you want to discuss this further, here’s my email address,” he said, pointing to the contact details in his presentation.

Deutsche Telekom CEO Rene Obermann responded immediately. “[We need] more innovation by cooperation,” he said, explaining that Deutsche Telekom is working with a number of OTTs and has invested in as many as 80 such companies. “We’re willing to sit down tomorrow and discuss with you guys,” Obermann said.

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the profitability, or otherwise, of telecoms operators in Africa was

a topic of hot debate at Mobile World Congress as a couple of the industry’s biggest players shared their concerns over the impact of regulatory interference and high taxes.

Real mobile penetration in Africa is still below 50% so therefore the continent still offers strong growth potential, but “there are also certain challenges,” such as aggressive price competition and unclear regulatory goals, said Sifiso Dabengwa, CEO of pan-African mobile operator MTN Group.

“Whatever we do in Africa we have to avoid what is happening in Europe,” he said, referring to regulatory intervention and falling market caps. “[We need to make sure] we don’t stifle the industry,” like in Europe.

“I’m not sure how many operators in Africa today are actually profitable,” Dabengwa said, noting that some operators in highly competitive markets are seeking to gain market share by significantly lowering prices. “We have a bit of a problem” when some are selling at lower than cost, he said, profitability being

necessary for investment. “This quest for subscribers has led to some tactics that are not sustainable.”

The regulators are also playing their part, pushing down termination rates in a bid to reduce retail rates for consumers, for example. “But what are you doing to the industry?” Dabengwa asked. “It could be a strategy to force some sort of consolida-tion,” he speculated. If that’s the case, “tell us,” he said. “One or two are going bankrupt,” he warned.

“Definitely a very small number of African operators are making money,” agreed Manoj Kohli, Bharti Airtel’s international CEO and joint managing director.

“Operators are losing money at the [customer] acquisition stage. It’s wrong,” he said, also noting that there are some smaller countries in Africa with populations of under 25 million and up to five operators. “This should change,” he said. “Operators and governments should jointly build this agenda of

MTN Group, Bharti Airtel ask whether it is possible to turn a profit in Africa against a backdrop of regulatory interference and high taxes

taXing timesinVesting in africa

i’m not sure how manY operators in africa are actuallY profitable

consolidation,” so that investments in 2G, 3G and fibre networks are paid back, he said. Otherwise people will not invest in Africa.

Operators also face a tough tax regime in many African markets. “The taxes and the levies are very high,” Kohli complained. He hit out in particular at taxes “by different names,” noting that levies of 8%-10% here and there can quickly add up to almost 45%. “It’s not a cash cow,” he said, suggesting that perhaps telcos are sending

the wrong message to governments with flashy advertising campaigns.

“Those marketing campaigns make it look like companies are making a lot of money,” he said.

“There is a perception that telecoms companies are making a lot of money...and that’s where the taxes come into play,” said Omobola Johnson, Nigeria’s minister of communications. However, she rejected claims that device acquisition costs in the continent are high because of taxation.

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“The taxes on devices are not that significant,” she insisted, claiming that 10%-15% of the cost of a device is customs duty and VAT. “We don’t think it’s a major barrier,” for consum-ers, she said, adding that the key will be to make sub-$50 smartphones a reality.

“We are starting to build smartphones...to cater to the needs of consumers in Africa,” said George Ferreira, COO of Samsung Africa.

The cost of devices is mostly affected by logistics, he said, but “duties on smartphones into Africa should be reduced or eliminated.” Instead, Ferreira suggested that governments should consider taxing airtime, since “no bypassing is possible and the consumer will pay for what he uses.” Take-up rose in Ghana when handset duties were re-moved, and in Ethiopia when rates were reduced, he said.

In the meantime, “we’re still some distance away from,” a fully functional sub-$50 smartphone, he admitted. “The price will come down between 20% and 25% this year on an entry-level smartphone,” he predicted, but not to the sub-$50 level. Open source platforms will also aid the cost issue, but not by enough to reach that target price.

Picking up on the key issue of the day, Ferreira also noted that “not all operators in Africa are profitable, I would agree with that.” And with all the discussion about

nokia’s €15 phoneNokia’s strategy of bringing Windows Phone to consumers on a budget gath-ered further momentum at Mobile World Congress, with the launch of two new Lumia devices, including its cheapest one to date. When the Lumia 520 hits the shelves in Hong Kong and Vietnam in March–followed by the rest of the world from Q2–it will come with a €139 price tag.

“Today we’re taking innovations like the ones seen in our [flagship] Lumia 920 and bringing those capabilities down to lower price points,” said chief executive Stephen Elop.

For consumers with slightly more money to spend, Nokia offers the €249 Lumia 720, which comes with a few more bells and whistles, such as NFC, wireless charging, and a higher-end camera. It will go on sale first in Hong Kong, Vietnam and Singapore in March, and then China, India, and other markets in Asia, Europe, and Africa from the second quarter.

It is a strategy that puts Nokia more directly in competition with the likes of Huawei and ZTE, which are using the Android OS to hit as many smart-phone price points as they can. Both the Lumia 520 and 720 will also come in versions that support China Mobile’s TD-SCDMA network. “It represents a bold step forward in our relationship with China Mobile,” said Elop, who an-nounced Nokia’s first TD-SCDMA-compatible Lumia, the 920T, in December.

Elop’s presentation was similar to the one he made at last year’s MWC, when he trumpeted Windows Phone’s arrival into the mid-tier smartphone market with the Lumia 610. In 2012 Nokia surprised with the introduction of its PureView imaging technology, announcing the PureView 808, a phone with a 41-megapixel camera. This year, the Finnish handset maker’s party piece was an ultra low-cost device, the Nokia 105.

“2.7 billion people in the world are still without a mobile phone,” said Marko Ahtisaari, EVP of design at Nokia. “This [Nokia 105] is a great phone for them at just €15.” The 2G-only Nokia 105 has a basic user interface, is constructed from cheap materials, and does little more than calling and texting. It comes with a built-in radio and a flashlight, and has long battery life. “You can charge it once a month and still rely on it,” said Ahtisaari.

Finally, the Nokia 301 completed the new line-up. Priced at €65 and coming in single-SIM and dual-SIM versions, it is a feature phone designed to offer some of the experiences that smartphone owners take for granted, such as email, Web browsing on 3G, and storage that is expandable to 32GB. Its battery also has a standby life that exceeds one month.

profitability, Nigeria’s comms minister had a valid question for the telcos: “Why are you still in Africa,” if you’re not making any money? Johnson asked.

“Africa is very profitable,” admitted MTN’s Dabengwa. “There are good profits being made,” but certain

aspects need to be managed better, he said, advising regulators and governments to look at the industry as a whole and take into account sustainability.

Europe was very profit-able at one time, but now the businesses are in decline, he said.

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it wouldn’t be Mobile World Congress without the world’s biggest

telecoms executives airing their grievances about regulatory regimes. At the opening session Europe’s CEOs were particularly vocal, bringing various issues to the table, chief among which was the need for policy makers to encourage investment by allocating spectrum in a fair and transparent manner.

“It is critical that we acquire additional spectrum, via an economically-viable allocation,” said Telecom Italia CEO Franco Bernabe. “The future of mobile depends on operators having timely [access to spectrum]...We clearly require more spectrum [for LTE],” he said.

“The mobile industry is still burdened by outdated regulation,” Bernabe went on. “Governments should avoid imposing excessive burdens on the industry in the form of specific taxes,” and excessive spectrum fees.

It was a theme taken up by many of the big names who followed Bernabe on stage. Telefonica CEO Cesar Alierta was keen to share his views on the industry’s inequalities. “Non-regulated dominant positions have

emerged. This is not good,” he said, referring to Google in the search space, the Android and iOS smartphone duopoly, and the likes of Facebook and WhatsApp.

Telcos pay an “enormous amount in taxes and spectrum...[but] others pay nothing at all...It’s not sustainable,” Alierta said. Operators have invested €225 billion in Europe in the past five years and yet are constrained by regulation and closed ecosystems.

“The UK sent a very clear message,” he added, referring to February’s auction of 800-MHz and 2.6-GHz spectrum that raised £2.34 billion, £1 billion less than the government goal. “These savings will allow us to innovate...instead of taking money out of the industry to achieve fiscal growth.”

Vittorio Colao’s Vodafone won spectrum in the UK auction. Colao criticised moves to “subsidise new entrants” to the mobile

market by reserving spectrum for them. He also called on regulatory bodies to stop excessive wholesale and retail regulation.

“We need to continue to invest,” with the right policies to generate returns on next-generation networks and LTE, Colao said.

Investment was also front-of-mind for AT&T CEO Randall Stephenson, who described spectrum as “the foundation” for mobile industry development. “It’s going to take a whole lot of [capital] over a very long period of time,” which requires the right spectrum and tax policy and light-touch regulation, he said.

He pointed out that in the US spectrum is sold in wider blocks and with a perpetual licence, rather than the defined-term licences granted in many countries. As a result, “one is inclined to pay more,” he said, and also to invest more in the rollout of networks.

The world’s biggest telecoms operators call on regulatory bodies to allocate spectrum in a way that encourages investment in networks.

call to armsmobile spectrum

the future of mobile depends on operators haVing timelY access to spectrum

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Executives in the mobile industry are facing the same challenges the world over.

View from the top

geographY: the mobile world

72k attendees at mobile world

congress 2013

(GSMA)

spectrum is the foundation for all of this

spectrum should be giVen to those who are willing to inVest

be sure that at least You giVe spectrum to the established operators

in africa we need to aVoid what’s happening in europe

we gaVe otts fertile ground to capture our customer bases

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