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20% of users experiencing mobile VoIP restrictions

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20% of users experiencing mobile VoIP restrictions

At least 20% of mobile Internet users in Europe experience some form of restriction on their ability to access VoIP services, according to a report from BEREC, the European telecoms regulators' body.

The BEREC report, "A view of traffic management and other practices resulting in restrictions to the open Internet in Europe", was compiled in a joint investigation with the European Commission, and was largely based on data submitted by 32 regulators, 266 fixed and 115 mobile operators. A questionnaire asked operators and regulators what traffic management techniques and practices are being applied currently.

The most frequently reported restrictions are the blocking and/or throttling of peer-to-peer (P2P) traffic, on both fixed and mobile networks, and the blocking of Voice over IP (VoIP) traffic, mostly on mobile networks.

As regards P2P, some level of restriction is reported by 49 operators (out of 266) on fixed networks and by 41 operators (out of 115) on mobile networks. As regards VoIP, some level of restriction is reported by 28 operators (out of 115) on mobile networks. Each of these types of restrictions affects at least 20% of subscribers.

Other, less common, examples of specific restrictions (including traffic degradation, i.e. blocking/throttling) are reported. These include restrictions on access to other specific applications (such as gaming, streaming, e-mail or instant messaging service) and, to a much lesser extent, on access to specific content and application providers.

A number of cases of operators giving preferential treatment to specific types of over-the-top traffic were also found (e.g. prioritising streaming and other real-time applications, HTTP, etc.)

Some examples of special treatment for over-the-top traffic reported by fixed operators are prioritisation of certain kind of traffic or applications at peak times (such as HTTP, DNS, VoIP, gaming, instant messaging, etc.), and assigning lower priority to applications such as file downloading, P2P, etc.

In mobile networks some applications or websites are excluded from the monthly data cap (HTTP traffic, customer care portals or applications such as Facebook).

Full details of the findings are available at this link.

BEREC compiled the traffic management data as part of its work on three draft documents relating to net neutrality that are open to public consultation, with a consultation deadline of 31 July 2012.

The three consultation documents are linked below (links are to PDF downloads).
Guidelines for Quality of Service in the scope of Net Neutrality
An assessment of IP-interconnection in the context of Net Neutrality
Differentiation practices and related competition issues in the scope of Net Neutrality

Not in our name? Lukewarm vendor response to EC’s “anti-dumping” probe against Chinese suppliers

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To see Ericsson's and ZTE's reponse – click here

A rumoured EU investigation into Chinese "dumping" of telco equipment into the markets of its 27 member states might be a battle that Europe's own telco vendors have no appetite for, even though at first sight they could stand to benefit.

An FT report on Friday said that the EC now feels it has enough evidence to warrant an enquiry into China's use of state subsidies to support "dumping" of telco equipment on the European market by Huawei and ZTE. The report quoted sources who attended an internal meeting held on Thursday between EC Trade Commissioner Karel De Gucht and representatives of the 27 member states. It noted that any official investigation and penalties could be bad news for European vendors, for whom China is a crucial growth market. The proposed danger is that any action against Chinese companies could be met with retributive action.

So who wants this battle?

It's not obvious that those who might be presumed to benefit — the European vendors who have seen margins and sales decline in the face of Chinese competition — have any great appetite to further the investigation, or have been instrumental in instigating it.

Mobile Europe approached Ericsson, NSN and Alcatel-Lucent for comment. We asked three questions, Do any of the parties have an official position on the reported EU Trade investigation into Chinese state subsidies of Huawei/ZTE? Have any of them ever raised this issue officially or unofficially with EU authorities? Do the vendors view the investigation as a potential threat to exports to Chinese market?

Alcatel-Lucent simply said "We don't have any comment" and left it at that. Ericsson is still to provide comment, and Mobile Europe will update with that if we receive it.

NSN was more forthcoming. It provided the following statements:
Q1: "As a European company that also has a strong presence in China, we do not believe it would be appropriate for us to take a position in this case. Our presence in China includes close cooperation with Chinese customers and R&D and manufacturing operations.
Q2: "We have been informed by the Commission that it was looking into this issue."
Q3: We understand that this is an initial step which is an investigation into the facts. It would not be appropriate to speculate about any potential consequences at this stage.

Meanwhile, neither the EC Trade Commisioner's spokesperson John Clancy, nor the Trade Commission's press office could be reached for comment as the EC is not open for business today (it's a holiday).

The telco "anti-dumping" action should probably be seen in the context of wider concerns about the effects of Chinese trade practices within Europe. On 22 May 2012, Commissioner De Grucht told The European Parliament that "the list of issues we need to address with China grows longer". He was speaking before Parliament adopted resolutions on European-Chinese trade relations, following the publication of a report called, 'China: Unbalanced Trade?' compiled by rapporteur Marielle de Sarnez, and four Parliament Committees.

"It is crucial for European business that we vigilantly defend our interests whenever trade rules are not respected. We are doing that with anti-dumping and anti-subsidy instruments. And we have resorted to WTO when that was necessary; for example to address restrictions on access to raw materials and rare earths," De Grucht added.

Huawei offers no plea in NSN marketing copy claim

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Did Huawei take the term "marketing copy" a little too literally?

Huawei is yet to offer a defence of, or explanation for, its apparent wholesale copying of an NSN marketing document.

A widely-seen blogpost by NSN's own media department laid out NSN's case, and drew attention to similarities in the two documents' structure, visuals, and certain elements of text (mainly headings). The documents in question can be downloaded here and here — both refer to the companies' consultancy capabilities.

Mobile Europe approached Huawei's press representative on Thursday 24 May asking it to account for the apparent similarities between the NSN flier, published in 2011, and Huawei's own consulting practices flier distributed this year. Despite the best efforts of the vendor's PR agency, the only response we have received so far is: "Huawei is aware of the matter and is looking into it".

Although on one level this looks like a minor matter – perhaps someone in a marketing department somewhere pressed on deadlines and short of ideas – I asked Huawei to comment because its consultants are very poorly served by such a slapdash marketing effort. Why should customers trust the consultancy practice if it can't even appear to structure its own marketing output, I asked?

So far, then, no answer, although to be fair we were told there could be a more detailed response in the course of this week.

 

 

Western Europe phone sales nudge into growth for first time in a year

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Western European mobile phone market returns to growth in 1Q12: Strong demand for Android devices, says IDC

The Western European mobile phone market returned to growth after three quarters of consecutive declines, according to International Data Corporation (IDC). Total shipments grew 1.3% year on year to 44.8 million units, according to IDC's European Quarterly Mobile Phone Tracker. Market growth was supported by healthy performance in the smartphone segment, which accounted for 63% of total shipments in the region.

Total smartphone shipments increased 37% year on year to 28.2 million units in 1Q12 from 20.6 million in 1Q11. The total feature phone segment continued to shrink, with shipments down 30% to 16.6 million units, compared with 23.6 million in 1Q11.

"Despite the fragile economic environment in most European countries, higher unemployment rates, and less disposable income, consumers showed that they are still willing to invest in smartphones when manufacturers understand their needs and offer them the right products," said Francisco Jeronimo, European mobile devices research manager, IDC. "During the quarter the biggest contribution to the segment came from the most expensive devices. The top-tier price band — devices priced over €400 — accounted for 49% of total smartphone shipments in the region, compared with 46% in 1Q11, with Apple's iPhone 4S and the Samsung Galaxy S II toping the sales ranking."

Windows Phone 7 improves market share, but it is the Android OS that is attracting Symbian and BlackBerry users

Android shipments increased 124% year on year to 15.5 million units and represented 55% of total smartphone shipments in the first quarter 2012. Google's operating system has been able to compete with Apple's iOS in the high-end price-tier segment, but more importantly it dominates the lower-end price tiers where Symbian and BlackBerry were traditionally strong.

iOS continued to grow due to the strong demand for the iPhone 4S. Total shipments increased 59% year on year to 7 million units and gave Apple's OS a market share of 25% in smartphones, up from 21% in 1Q11.

BlackBerry OS is losing its shine with consumers. Shipments were down 27% year on year to 2.5 million units and market share fell 9% in 1Q12 from 17% in the first quarter 2011.

In 1Q12 Symbian represented less than 5% of total smartphone shipments in Western Europe. The operating system lacks operator support and the latest version of the OS, the Symbian Belle, has failed to attract consumers in the region. During the quarter shipments were down 70% year on year. IDC estimates the last Symbian devices to be shipped by the end of the first quarter 2013.

Windows Phones grew 156% year on year to represent 4.1% of total smartphone shipments, up from 2.2% market share in 1Q11. The Nokia Lumia range has performed interestingly but it still below expectations. Nokia's new Windows phones to be launched this year will continue to contribute to steady growth for the OS. IDC expects a better performance from Microsoft's operating system by the end of the year. The new Windows Phone 8 handsets to be launched by manufacturers are drawing attention from operators in Europe.

Bringing real-world perspective to wireless network testing

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Network testing must be smartphone-specific, says this guest piece from Myungsup Kim, CEO, Accuver. Kim claims that although operators and vendors attest to investment in the signalling and radio performance of their networks, these is little collaborative work being done that takes advantage of the wealth of data available to create a picture of actual call quality and voice QoS on networks.

"Claims that vendors have fine-tuned their networks to allow for signaling need to be verified in terms of end-user impact," Kim writes. He adds that finer-grained testing might be able to establish if there is a point at which "networks have a smartphone-based threshold beyond which there will be a permanent degradation of quality."

If such a limit exists, the ability to accurately model and forecast it would have a significant impact on the market, he adds. Operators could also test the impact of data offloading on VoIP over WiFi call quality.

Kim's full post follows:

Bringing a real-world perspective to wireless network testing
Myungsup Kim, CEO, Accuver

Mobile network testing and optimisation has been a priority since mobile phones were first produced; yet when smartphones arrived they were not met with new, more appropriate methods of network testing. As the proliferation of smartphones and the use of data-based services continues to increase year on year, there is enormous pressure on vendors and operators to conduct smartphone-specific testing as part of their network improvement programmes to ensure consumer satisfaction. Ultimately, basing network and service improvement programmes on the richest and most appropriate data available will lead to greater end results.

If the industry is to have an open and objective dialogue about the cause, effect and potential fixes for wireless network performance bottlenecks, then operators and vendors must not rely simply on high-level key performance indicators. It is essential that the radio frequency data is analysed and more specifically, from a subscriber perspective using commercial smartphones.

The proof is in the results
Accuver recently supported the Korea Communications Commission (KCC) in conducting the world’s first smartphone testing project of this kind on a national scale, with the active involvement of all major network operators. The testing focused on measuring the voice call quality and dropped-call rate, as these issues are paramount to delivering the best possible service to mobile users.

These tests showed that the overall voice call success rate for mobile-to-mobile calls (98.7%) was better than that of smartphone-to-smartphone calls (97.6%). The resultsof the KCC’s tests highlighted that there are specific areas in need of improvement on voice calling on smartphone devices, emphasising that joint efforts are needed to improve that quality of voice calling on smartphones. Claims that vendors have fine-tuned their networks to allow for signaling need to be verified in terms of end-user impact, and this information should form the basis of further improvements.

Supporting industry-wide innovation
The entire mobile industry and its consumers would benefit from these more appropriate testing initiatives being brought in as standard. We have cutting-edge test and measurement solutions at our disposal, capable of delivering highly detailed information based on real-world performance, however the uptake of nation-wide, collaborative projects such as those carried out in Korea has been disappointing to date.

Furthermore, smartphone-specific testing would help to establish whether or not networks have a smartphone-based threshold beyond which there will be a permanent degradation of quality. If such a limit exists, the ability to accurately model and forecast it would have a significant impact on the market.

Extending testing to cover VoIP would also further reinforce understanding of network performance, to assess the impact of data off-loading on call-quality over Wi-Fi, for example.

Collaboration is key
If voice call quality is to improve in line with user expectations, vendors and operators should be working together to implement more valuable end-user centric network testing. The testing of smartphone devices on networks at a national level ought to be standard practice in today’s gadget-dominated society where user expectations continue to grow, as do the capabilities and demands of the devices being used on our networks.

Going forward, network/service improvement programmes and methods should be continually reviewed and adapted to reflect the devices and services that are actually being used in the real-world, on a national scale.

 

Necessary hedges

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There was a depressing start to Informa's LTE World Summit. The government minister who was going to provide the opening gags about enjoying the food and not getting robbed on La Ramblas couldn't make it because all hands were required on deck in Madrid to steer the ship of state through the Euro crisis.

Then Orange Spain's CTO got up on stage and delivered a presentation of such downbeat realism and near misery that the Asian, US and Middle Eastern audience must have been tempted to ask if they were at the right event. Margins are sliding, growth is slow, LTE is only a partial cure, we need network sharing at a deep, deep level (or, you know, fewer operators) and my coffee's just gone cold. That sort of thing.

To give us a lift, next came the Group CTO of Vodafone – surely he would be upbeat, what with the 800MHz LTE done and urban deployments beginning to happen. But he also couldn't make it in person, because of an ear infection stopping him from flying (really, where's the commitment, people? Get that man some antibiotics and a fast car). Anyway, Mr Jacobfeuerborn was bravely attempting a live Skype video conference using an LTE-connected laptop at his end. The quality was somewhat grainy given his image was blown up to a five meter high screen, but it worked well enough. The only problem was, and this is kind of key in a Skype call, was that Jacobfeuerborn couldn't hear very much at all of what  was being said to him – seemingly because the laptop Informa was using couldn't pick up the audio from the presenter standing a few metres away on stage.  In the end, Jacobfeuerborn abandoned the session, depriving us of his views on OTT competition, carrier WiFi and more. LTE 1 AV 0

Over at the OTT track – how the telcos can deal with and profit from OTT services and applications – there was an interesting-looking talk listed from Viber CEO Talmon Marco – subtitled "How are Viber collaborating with operators to provide improved end user services". If you combine the curent industry preoccupation  with OTT providers with the fact there was also a whole conference track scheduled on VoLTE, looking at LTE VoIP and all that, this looked like a key presentation to be at. But, sadly, Mr Marco didn't make it to the event either. Not even over Skype, er, Viber.

Lamp post land grab…

"When I ask the incumbent vendors if interoperability can happen, they say it can't be done. If I ask the new entrants, they say it's not a problem…" Jaime Lluch, Telefonica Spain.

And so goes the world. If you're protecting a position, then you say that it's a nightmare integrating all this new fangled stuff. If you're producing the new fangled stuff, you say it's a cinch, you've designed with all interoperability in mind.

It's nice to be NSN then, who is both incumbent and newcomer for small cells. How so? Well obviously it has a well-established positioned as incumbent provider in many 2G and 3G networks. But its small cell Flexi Zone architecture, which combines clusters of small cells, was largely developed by Motorola before its acquisition by NSN. Now, Motorola essentially has no 3G position at all (sorry, but it's true), and therefore approaches the market as a challenger – so we have a product designed to operate in a macro network provided by another vendor.

That aside, I thought one of the most interesting points to come out of NSN's presentation from Stefan Dueble was him urging mobile operators to get street furniture signed up. Essentially, he is urging operators to make a land grab for lamp posts, or light poles, bus stops, anything they can get their hands on at street level, or rather just above street level. Even if operators aren't going to deploy small cells in high density any time soon, he still thinks operators should get in there and get ownership of urban real estate. There's a chance there will be many, many individual negotiations

NSN has definitely been thinking this stuff through. I had sight of an app it has developed for the field deployment guys that combines QR codes and satellite-view Google maps with an on-phone app that gives installers a simple checklist of deployment. Power on, check lights, etc It goes further, though – Dueble said that the vendor has a unit developed that "shrouds" the base station in a fake lamp. However, it soon learnt it had to put some LED lights inside the "lamp" as local authorities would get calls from residents saying that there were non-functioning lamps on their street. It goes to show that it's all very well getting excited by the technical possibilities of underlay and overlay networks,  but the "dirty street" practicalities are very much part of the battle. Expect to see vendors make a great deal more of this side of things – deployment and operation – around small cells over the year.

This also plays into the "site where the traffic is" or "site where the backhaul is" discussion. Do you find the hottest of hotspots, or zones, and deploy there? Or do you find where you can "do" some viable backhaul and go with that. NSN thinks the former, which is why its units include Non Line Of Site (NLOS) microwave for backhaul integrated in the unit. Others think NLOS MW does not have the capacity required, and other options will be required – form millimetre wave to mesh or P2MP architectures. There didn't seem to be a great deal of clarity coming out at LTEWS on this topic. We are still at the trails stage with operators in all instances.

WiFi hedging
There was a slightly surreal exchange about WiFi with Softbank and Informa analyst Mark Newman. Softbank's spokesperson admitted that its outdoor WiFi rollout had been rendered effectively "useless" by the sheer number of APs deployed by itself and all the other Japanese network providers. Yet asked if Softbank is still deploying APs, despite admitting they were useless, he said yes – because the other vendors are too. In other words, if one vendor releases a PR saying it has deployed 200k WiFi hotspots, you have to say you've deployed 250k, even if they don't work because they are hamstringing each other through interference. Kudos to the first operator in Japan to release a PR saying it is helping the user experience by removing hotspots.

Anyway, that exchange seemed to reflect a rowing back from the "Carrier WiFi Everywhere" messaging we were getting at World Congress. There now seems to be more recognition of the potential for carrier WiFi, especially outdoors, to create business and technical issues.

We spoke to one vendor who was pessimistic about operator WiFi. "I can't understand," he said, "how operators are not going to destroy their value. They all talk about monetising their data services, and the need to extract maximum value from their spectrum assets, and then they go WiFi everywhere. How does that make sense?"

"How is your WiFi gateway business working out," I asked.

"That," he said, "was a necessary hedge against operators going that way. I still think it makes no sense."

Ah well, we all need a necessary hedge now and then. I bet Ofcom wished it had a necessary hedge to hide behind at the moment. At the moment it is stuck picking thorns out of its derriere, courtesy of a Hobson's choice decision it has been landed with over Everything Everywhere's desire to use its 1800MHz spectrum.

Auction rules in July, bids in december, spectrum in 2013, the man from Ofcom said. He left out the court dates, though.

Have a good weekend everyone. I'm going to celebrate it by eating each and every one of the 12 doughnuts sent to this office by Everything Everywhere to celebrate the completion of its "Big Switch On" campaign. Six were covered in orange icing, six in magenta – see? I feel like sending one down to Group partner Orange Spain to cheer them up. Doughnut sharing, as it were.

Keith Dyer
Editor
Mobile Europe

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Ofcom sticks to guns over 1800 refarming, LTE auction

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"We regulate for the benefit of the consumer, not the industry"

Ofcom's Group Director of Spectrum Policy, Professor H Nwana has said that Ofcom is still "minded" to approve EE's application to refarm 1800MHz spectrum for LTE services, despite continued strong opposition from Telefonica and Vodafone.

Describing the refarming of 1800MHz as a "very thorny issue", Nwana said that Everything Everywhere's competitors had reacted "very vigorously" and had "promptly rebuked" him for his recent statement that he was "minded" to approve EE's liberalisation application.

Yet speaking to Mobile Europe on the fringes of Informa's LTE World Summit in Barcelona, Nwana said that his principal, government-mandated duty is to regulate for the benefit of the consumer, not the industry.

"I have to regulate for the benefit of consumers and the wider economy, not for the industry. The mobile data curve that we've seen is that customers have soaked up all the broadband supply – so we have to look at the benefits to consumers, e-commerce and to UK Plc of access to 4G. That must be the right thing to do."

"And I have not said we will definitely liberalise. We have said we are "minded" to liberalise, and in fact we have received strong responses to that. Obviously [Vodafone and Telefonica] have reacted very vigourously saying that you are going to give our competitors a 12-18 month head start for LTE. "

Nwana also held on to Ofcom's line that although the auction is happening later than it would have wished, its delay will not delay actual LTE deployment for operators, as spectrum would not be fully cleared in time for use across the UK before late on in 2013 in any case.

The two main issues are clearing DTV channels 61,62,66 as well as mitigating interference on UK airport radar systems that operate at 2.7GHz, a band that sits right next to 2.6GHz LTE spectrum.

Nwana said that some airport receivers are very old, and can hear signal right down as low as 2.4MHz, meaning that the potential for interference — and grounded planes as a result — is high. The solution is to upgrade those receivers, fitting filters to ensure they receive the signals they should. It will be 2013 and even into 2014 before solutions for all the radio types at UK airports are operational, he said. Until then, operators will face exclusion orders and other license conditions for 2.6MHz LTE around airports – meaning that around key areas for operators, the London and South East airports, LTE deployment would necessarily be delayed in any case.

"We've been clear – the earliest we can clear spectrum around London and the South East is October 2013 – and that's where the operators are likely to start rolling out their networks. That's not guiding our timetable, but every time someone throws rocks at me, I also point out that they would not be able to use that spectrum for quite a while anyway."

That said, Nwana did concede that the spectrum auction process has been difficult.  "We've been trying to get the spectrum on the road in the UK for quite a while, with quite a lot of difficulties."

Nwana said that Ofcom would publish the rules for the auction in July 2012, with applications made before Christmas, and spectrum awarded in 2013.

Other items Nwana clarified for Mobile Europe:

  • The regulator is still proposing to reserve 800MHz spectrum for a fourth operator. Nwana said that the regulator is committed to having four national wholesale providers.
  • The proposal to keep 2x10MHz at 2.6GHz for shared, low power use, is still on the table. This would allow multiple license holders to provide indoor LTE coverage on a local basis. The aim here is to provide the option for companies to build business cases based on indoor capacity and coverage.
  • The re-assignment of license fees for 900MHz spectrum is still likely to be determined, "in some manner", by the price achieved by 800MHz spectrum. This matters because at present, Telefonica and Vodafone pay relatively little for 900MHz spectrum. The two 900MHz license holders are not too keen on the idea, because it means that any bid they make for 800MHz spectrum will effectively boost the fee for their 900MHz spectrum
  • One 800MHz license will carry an obligation to provide 2Mbps service by 2017 to 98% of the population.

LTE World Summit: Apple, OTT, WiFi and being the “conscience of the future”

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I've written a report on the main speech of the morning at LTE World Summit. But there have been other conference soundbites that I thought were worth a quick review. Here they are:

1 Can I have your job, Chika?

"The CFO is asking for flexibility, and we are being asked not to commit, and to review capex every three months so they can play with capex. I think we, as the technical team, have a responsibility to be the conscience of the future of the business… watch out if we don't invest now because at the end we will lose our position." – Eduardo Dato, CTO, Orange Spain

"It's a global issue. COO's are more interested in the dividend than investment, then if that is the focus then we will not be able to grow. It's time for top management to stand up to shareholders and say we need to invest. If we don't invest there won't be growth." – Marwan Zawaydeh, CTIO, Etisalat, UAE

"I do have a review every three months, but as data demand is doubling every year, every time I am being pushed to deploy as much as possibie by my CFO because LTE is more efficient cost per bit, better margin." – Yoshioki Chika, CTO, Wireless City Planning, SoftBank, Japan

2. WiFi's Mutally Assured Destruction:

"WiFi is almost useless outdoor because of interference. We did 200k hotspots and everybody followed, and we got interference. You do need controllable spectrum."(Yoshioki Chika, Softbank)

"So are you continuing with WiFi rollouts?" (Mark Newman, InformaTM)

"Yes, because our competitors are." (YC)

"So would you change anything about your deployment – what would you do differently?" (MN)

*Shrug* "It is not my department." (YC)

3. Contra Candy

"The price per bit is irrelevant. Once you've made the investment the electrons are free. It's a fixed cost business that requires economies of scale."

"More data doesn't necessarily mean more cost. There's been massive reduction in the cost of computing and routing equipment, so we can upgrade our platform and end up with 10x the session throughput for half the cost."

"Capacity upgrades are not that expensive. A new line card in your NodeB is only £3 thousand or so. Not a lot of money compared to your initial investment." (All Ed Candy, Ex-CTO, Three)

4. Vendors in dire straits:

"We need to find ways to gain some margin. It won't come from OTTs. And we can't pass it on to industry vendors because they are already in dire straits. It must come form our own business." (Eduardo Duarto, again)

5. OTT? We are OTT

"We will also work with OTT providers, to live together and find a way to earn money. We will support the open internet and take care to be discrimination free, and anyway we will be an OTT player as well." (Bruno Jacobfeuerborn, CTO Deutsche Telekom)

6. Apple does it differently

"The arrival of these guys was a shock. When we first started with Apple to talk about getting the iPhone, our first conference call was at 1am. We had to adapt ourselves to the way they work." (ED, Orange Spain)

 

 

 

 

 

Orange Spain CTO calls for active LTE network sharing

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25% cost of ownership reductions by sharing RAN and backhaul with another partner

Mobile operators in the more economically-challenged European countries will not be able to make "massive" LTE deployments unless the economics of rollout and operation are radically changed, according to Eduardo Duato, CTO of Orange Spain.

Those changes include a shift to active RAN and backhaul network sharing, as well as new deployment models from the vendors.

Duato said that even though LTE is 100% more spectrally efficient, and is 30% cheaper in total cost of ownership than 3G, it is still not cheap enough to enable operators to invest with confidence in "massive" rollouts.

"The the trick of LTE is that if you are going to try to monetise LTE services, it's very unfortunate but you have to do a massive investment. It doesn't work to do only Barcelona and Madrid. We keep doing calculations on how to monetise this service. Mobile broadband revenues are falling faster than costs, there is continuous margin reduction, signalling traffic is a fixed fee. We need co-operative architectures to reduce the impact," Duato said.

One solution that Duato floated is to deepen current network sharing initiatives beyond passive site elements to actual active RAN and backhaul sharing. Duato estimated that two operators sharing the RAN and backhaul networks on a 50-50 basis could each save 25% of the TCO of the LTE network.

"My demand to this audience, if we are going to bring this technology quicker to the users, is that we all try to work out new and efficient ways of rollout. We need help on this rollout from those in administration and the equipment suppliers to support new features that make the rollout possible" Duato said.

One of the reasons for Duato's call is his view that predictions of LTE data revenues are too aggressive for a market like Spain. An Ovum forecast of 7m LTE users in Spain by 2015,  and 14.7 m by 2016, was "over-optimistic", he said.

"It has been forecast that LTE be 25% of total data revenues by 2016. But here in Spain growth it is not that good, in fact it is very bad, so we forecast that in spite of the money we have paid for frequencies and the possibility for refarming, the growth is not that good."

Duato added that operators will not be able to extract any more cost reductions from equipment suppliers ("They are already in dire straits") or from the fabled OTT providers ("We have to be realistic it will be almost impossible, even though we may attempt to profit from OTT services"). That only leaves operators' own processes as a potential source or margin improvement – hence the need for network sharing.

He was less impressed by claims that LTE would bring operational savings. ""We are not so confident about the cost of operations, because we have heard this several times before and in fact things always seem to get more complicated for the operator," he added.

Asked by InformaTM head of research Mark Newman if Orange would consider handing back spectrum as a result of being allowed by the regulator to share networks, Duato said the operator would consider spectrum pooling, amongst operators – especially in rural areas. "In urban areas, we need all our spectrum," he added.

There have been many

Vodafone Q1 results: slow UK data growth, Spain’s SMS carnage

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UK data revenues grew by just 5% – despite the 22% Group headline figure

By Keith Dyer

The industry is always keen, for obvious reasons, to understand just how much voice and messaging revenues are falling off and how much data revenue is growing. The wider industry narrative is that traditional revenues are falling and that data revenues need to come to the rescue. Yet data revenue growth itself, whilst steady, is not enough either to plug the first gap or to justify the network investments carriers need to make to support the required growth in data traffic. It's a viscious cycle that has carriers chasing investments deeper and deeper into a broken future. Meanwhile, WhatsApp, Google, NetFlix and Apple stroll off lighting cigars with £50 notes.

Vodafone's latest quarterly results contained breakdowns on revenues* in each sector, by country. So what, given the limited scope available, do they tell us, and do they support the current orthodoxy, as outlined above?

Whither voice?

Vodafone's Q1 results show that the broad picture of declines in voice revenues continues. In Europe as a whole, Q1 voice revenues were down 9.3% from this time last year. In Germany, for example, voice revenue fell from £802 million to £720 million – a drop of around 10%. Italy and Spain saw similar drops in percentage terms, with the UK also showing a decrease, albeit a smaller one at around 5%.

What of voice volumes as a percentage of overall revenues? In Germany mobile voice still accounts for about 53% of mobile service revenue. In Italy voice accounts for 63%, in Spain 73% and in the UK 51%. So voice is still providing the majority of service revenue, despite its decreasing share. In Spain, its percentage is very high because messaging revenues are very low, as we are about to find out.

The obvious, and well understood, conclusion is that voice is still the largest revenue stream for a T1 like Vodafone in major European markets. It is also on the decline, year on year, at somewhere around 5-10%

Getting the message?
What of messaging revenues? Well, overall in Europe, messaging revenue decreased 0.6% on a reported basis, and increased 2.8% on an organic basis. If you look at this across the four big countries, there were actually increases in messaging revenues in the UK (9.4%) and Germany (14.5%) and a small decrease in SMS revenues in Italy (-7%). Spain, however, is seeing SMS revenues tumble much faster. In Q1, SMS accounted for £79 million in Q1 2011. This year it generated just £54 million: and that £54 million is beginning to look insignificant against voice revenues of £639 million and data revenues of £171 million in the quarter.

This looks specific to the Spanish market at the moment. Telefonica Spain too has seen revenue from SMS tumble, with non-SMS data now accounting for 80% of all data revenues – a much higher percentage than in most markets.

Messaging revenues versus data
Messaging revenues are not yet the third line of revenue for all Vodafone's in-country operations. In Germany and Spain, data has now overtaken messaging. In the UK and Italy, it has not.

In Germany data revenues stand at £395 million, against SMS/MMS sales of £229 million. In Italy messaging revenue is just ahead, generating £197 million compared to data's £178 million. In Spain, as we have seen, messaging is off the cliff, whilst data has grown from £142 million to £171 million this quarter. In the UK, messaging is in fact still way of head of data, generating £324 million in Q1 2012, whilst data rose only slightly to £220 million. In Italy, messaging revenue did fall but it still generated £22m more than data for the quarter. Perhaps by the next couple of quarters that balance will have shifted the other way.

Data revenues
Although across the whole Vodafone group data revenues were up 22%, in Europe growth was much less strong. In fact, data revenues grew only 15% across Europe. In the UK, data revenues grew only 5.7% (whereas messaging grew 9.4%). In Germany data growth stood at the European average of roughly 15%, but was matched by messaging growth. In Spain data revenues grew 20% and in Spain by 11%.

Conclusions
The blanket picture of "traditional revenues falling, data must come to the rescue, yet data growth is too slow to match the required investment" is far from the whole story. Messaging revenue in particular seems to be very reactive to in-country conditions, and therefore it is too easy to state either that messaging revenues are under threat or bouyant. In the UK, data revenues grew only 5%, outperformed in growth terms by messaging revenues, in Germany data and mesaging revenue growth were matched. In Spain and Italy, data was on the up, as messaging revenues decllned.

One view might be that that leaves the UK operator much more exposed to an attack on messaging from its OTT competitors. Another might be that UK consumers are still ready and willing to pay for operator messaging, as opposed to Spain where messaging value is seemingy being destroyed.

You also have to view increases in data revenues against the in-country market background. Again, in Spain, where data revenues increased by a healthy looking 20% overall revenues fell by 11%, due to an understanable fall in voice revenues, as well as that steep mesaging decline we have aleady noted.

So although this is a global industry, it still appears to act in a very local manner.

* I received a note of caution on revenue allocation from  analyst Dean Bubley of Disruptive Analysis. Dean reminded me (via Twitter) that when an operator sells bundles of voice, messaging and data, there is potential to "fudge" revenue allocation across those segments. For what it's worth, and without being more than usually naive, I think, for the time being, you have to take, even if you don't want to trust, the results as given. If Vodafone is somehow knowingly playing about with the numbers, then it will only come back to haunt it. And again, I think the variation in country performance shows that local conditions are likely to be very influential at the moment.

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