Dish abandons Sprint Bid

Dish Network says it is giving up on the effort to buy Sprint and instead will concentrate on trying to get a minority investment in Clearwire. The not unexpected move might be said to be dictated by the tight time frame for Dish to submit a revised offer by June 18. Dish couldn't comply. 

But many observers would say neither could Dish easily afford to take on the debt burden to buy Sprint, either. And some would say both that effort, and the continuing effort to win a minority stake in Clearwire (even Dish does not believe it can gain full control) are simply "negotiating" ploys to gain influence over Sprint. 

The move clears the way for SoftBank's merger bid with Sprint. SoftBank would own 78 percent of Sprint.

At $21.6 billion, the deal could mark the biggest overseas acquisition ever by a Japanese firm. But to the extent that SoftBank continues to see the Clearwire spectrum as essential to it plans, the drama now focuses on whether Sprint can win control of Clearwire or not.

Some would argue a Softbank-owned Sprint could still proceed with its plans, even if Dish Network were to gain a minority stake in Clearwire. But that would not solve Sprint's original problem, namely periodic differences with Clearwire management over strategy. 

As much sense as that makes for Dish, which badly needs an operating partner and more spectrum to launch its planned Long Term Evolution network, some might wonder how well a poisoned relationship between Sprint and Softbank, on one hand, and Dish, on the other, could work too well. 

Dish Network's position is something like "I don't care whether you like me; just help me build a rival network to yours." 

Service Providers Hope Ubuntu Will Emerge as a New Smart Phone Operating System

The new Carrier Advisory Group, including EE, Deutsche Telekom, Korea Telecom, telecom Italia, LG UPlus, Portugal Telecom and SK Telecom, aims to help shape the use of Ubuntu as a smart phone operating system.

The CAG is intended to allow mobile operators to help shape Ubuntu’s mobile strategy, leading ultimately to the creation of Ubuntu-based smart phones.

Carriers would prefer not to allow Apple and Android to become too powerful in the device business, as that increases leverage for providers of those handsets, while simultaneously limiting service provider choice and leverage.

The issue is whether there is room in the market for any new operating system. End users and device suppliers will have the ultimate say, no matter what service providers do.

Canonical is sponsoring the Carrier Advisory Group, as part of its own effort to establish a market position for Ubuntu in the smart phone market.

Largest South African Bank Might Become a Mobile Service Provder

First National Bank reportedly is in discussions with mobile service provider Cell C about FNB's launch of a branded mobile service. 

FNB already offers its banking clients discounted mobile devices, including tablets and smart phones. In fact, FNB already is one of the biggest airtime distributors and bulk SMS users in South Africa.

Such a move would be the bookend to the moves some mobile service providers are taking to become a bigger part of the banking services banking services ecosystem. 

Safaricom already has millions of Africans using their mobile phones to send cash through an SMS network, Safaricom is now trying to tempt them into a savings-and-loans service called M-Shwari.

An M-Shwari account can be set up instantly and accessed from any mobile handset. It is operated jointly with Commercial Bank of Africa.

Defaulters face losing their phone number, a deterrent to defaults. 

In its first four months 2.3 million subscribers opted in to M-Shwari; about 900,000 of them have active accounts. Deposits to date total four billion Kenyan shillings ($47m). A third of customers have applied for small loans, averaging around $12.

Liberty Global Bids for Kabel Deutschland

Germany's biggest cable operator Kabel Deutschland Holding AG has received an acquisition proposal from Liberty Global. Vodafone Group earlier had made a bid, which Kabel Deutschland initially rejected as "too low."

The move illustrates the growing wave of telecom mergers many expect to see unleashed, in part because conditions for consolidation in Europe are improving, because growth has stalled and because "growth by acquisition" is becoming the surest way to boost revenues. 

The other issue is that dealmaking has been muted in the wake of the Great Recession of 2008, as was the case following the collapse of so many firms in the Internet Bubble crash. History suggests activity will climb again as distance from the last recession grows.

                                     Global telecom deal volumes/deal values 2000–2010                                                                                                                                          Source: Thomson SDC Platinum

The "name of the game in the cable business is scale," Liberty Media Chairman John Malone says, referring to the need for yet another wave of consolidation in the U.S. and European     cable business. 

In part, the problem is that markets are more competitive, with other providers taking market share, and with more pressure on profit margins. 

As with any other market where margins are dropping, suppliers can compensate by increasing the volume of sales, which means more customer scale. 

In principle, the same dynamics are at work in other parts of the communications business as well, ranging from mobile services to rural telecommunications to competitive local exchange carrier and incumbent local exchange carrier markets. 

Apple and Samsung, for example, dominate profits in the smart phone industry, some would say because they also dominate market share. 

That relationship between market share and profits is one reason consolidation in the cable and other parts of the communications and video entertainment business will continue. 

                                                Deal values by transaction type 2000–2010

Source: EY Survey Why Capital Matters (2000-2009) and Thomson SDC Platinum (2010 data)

Chromebooks Getting Major Retail Support

Chromebooks now will be sold in more than 6,600 stores around the world, expanding beyond Best Buy and Amazon.com to Walmart and Staples. In the coming months select Office Depot, OfficeMax, and regional chains Fry’s and TigerDirect locations will begin selling Chromebooks, Google says. 

Walmart will be selling the Acer Chromebook in 2,800 stores across the United States for $199, starting this summer.

Staples will bring a mix of Chromebooks from Acer, HP and Samsung to every store in the United States, about 1,500 stores.

What is the Global Value of Wi-Fi? How Much More Would be Added by Additional Spectrum?

Each household globally already using Wi-Fi may derive a yearly benefit from Wi-Fi of $118 to $225 resulting in a total economic gain for all households of around $52 billion to $99 billion annually, a study commissioned by Microsoft suggests. 

In the absence of Wi-Fi, mobile operators would be forced to invest large sums in their 
networks or strictly curtail their users’ usage. 

Worldwide, approximately 150,000 to 450,000 new radio base stations would be needed to cope with world smartphone traffic in the absence of Wi-Fi. 

That suggests a savings of about $30 billion to $93 billion in a single year, given current rates of tower construction. 

A 40% yearly growth of data traffic to 2016 will require mobile operators to deploy an 
additional 115,000 extra sites, an increase of around 4% from today’s numbers. However, in 
the absence of Wi-Fi an additional 1.4 million macrocell sites, or 43% of the current total 
would be required. The difference in costs between the two scenarios is extremely large, 
$250 billion (NPV) – comparable to around one third of the total annual revenue of the 
telecommunications industry. Even the least expensive solutions involving femtocells or 

picocells would require an investment of $45 - $60 billion. 

Perhaps that is one way of illustrating the potential value of more extensive use of unlicensed spectrum. 

Many would argue that more spectrum--often licensed spectrum, but perhaps more crucially additional non-licensed spectrum--is needed to spur additional competition in the broadband access market (though some would argue competition in not everywhere the key problem at the moment).

In the case of smartphones and tablets, Wi-Fi carries 69 percent of total traffic. For 
traditional PCs and laptops, Wi-Fi is responsible for carrying 57 percent of total traffic, greater 
than the share of Ethernet connections and 3G data combined. 

Some 439 million households – 25 percent of all households worldwide – have home Wi-Fi networks. 

Without Wi-Fi the value of fixed broadband would be lower and would result in the disconnection of perhaps 50 to 114 million fixed broadband connections around the world. 

More Spectrum, and More Non-Licensed Spectrum is Needed

Many would argue that more spectrum--often licensed spectrum, but perhaps more crucially additional non-licensed non-licensed spectrum--is needed to spur additional competition in the broadband access market (though some would argue competition in not everywhere the key problem at the moment).

As always, perspectives hinge on any number of considerations including the ways such policies affect incumbents of all sorts, including the ability to secure capital to exploit available non-licensed spectrum, and the impact of licensing costs and access on the potential range of business models.

Investment has become a more important issue for many regulators given the growing uncertainty about traditional communications business models, combined with growing competition from network-based and over the top rivals.

On the other hand, even supporters of non-licensed spectrum approaches will note that unlicensed bands are less flexible if future needs change.

But some of us might argue that the value of the unlicensed approach is that it promotes experimentation and makes possible market entry into communications by providers that do not and cannot invest gobs of capital into their businesses.

In other words, most would agree that licensed approaches favor bigger companies, while unlicensed spectrum favors smaller companies, who can get into markets without investing in spectrum assets.

Some might also argue that unlicensed spectrum approaches traditionally have not gotten the serious attention of policymakers and regulators in many parts of the world where entrpreneurs might well leap into the ISP business if they were not required to pay for spectrum and comply with licensing requirements geared to tier one communications service providers.