AT&T "Open" to European Acquisitions

Major bouts of communications industry consolidation tend to occur in waves, often when regulatory and financial conditions are favorable, and when major competitors make major moves that realign market share. 

Some would say European regulators are signaling receptivity to more mergers, financial markets are signaling that money is available, and Verizon and Vodafone have made the first big move.

In the U.S. market, Sprint and T-Mobile US have made significant moves, though AT&T has been denied the chance to make a move of its own in the domestic market. That only makes European or other acquisitions more attractive, as expansion on a major scale among the four leading national mobile suppliers seems unfavorable, on the regulatory front. 

AT&T CEO Randall Stephenson also notes that Verizon's recent ability to sell $49 billion in bonds, to help fund its purchase of the balance of Vodafone's stake in Verizon Wireless that Verizon did not already own, shows there is capital available to fuel acquisitions. 

The bond offering was "eye opening," Stephenson said. "It allows you to think differently about things, different than you might have thought three weeks ago."

Some might look at revenue trends in the European mobile market and see weakness, as revenue seems to decline every year. But AT&T believes it could reverse that trend by investing more in Long Term Evolution 4G networks and thereby raise revenue, as it has seen is possible in the U.S. market. 

Major acquisition windows that rearrange markets do not open very often. When they do open, contestants need to move before the windows close again, as they will.

Separately, Telefonica will boost its stake in Telco, the holding company that controls Telecom Italia, to an initial 65 percent with an option to bring the stake to around 70 percent, according to Reuters.

Telefonica already own 46 percent of Telco, representing in turn about 10 percent of Telecom Italia shares. Telefonica says It will boost its stake in the Telecom Italia to nearly 16 percent.

Telefonica is set to acquire its additional shares from the other Telco shareholders, including Italian banks Mediobanca, Intesa Sanpaolo,  and insurer Generali.

That move might well be viewed as part of a coming merger wave in the European telecom market.

T-Mobile CFO Says Merger with Sprint Could Happen

T-Mobile US Chief Financial Officer Braxton Carter he expects  more consolidation in the U.S. mobile market, and some would say any significant further consolidtion could only mean a merger between T-Mobile US and Sprint.

Many observers would say that is not an immediate or even medium-term prospect, as U.S. antitrust officials believe the U.S. market already is too concentrated, and requires four competitors. 

Since 1991, most countries already have seen consolidation of suppliers in their mobile markets. 

AT&T Believes Economics of Gigabit Access Networks Increasingly "Look Good"

AT&T has said it will build 1-Gbps access networks in Austin, Texas, though some would say the specifics are lacking. That will  not surprise too many observers who follow the ISP business closely. 

No incumbent with a decent business selling access at about $3 to $5 per Mbps would be foollish to prematurely risk dropping those prices in a major way. 

And though many will criticize the language as not serious, AT&T CEO Randall Stephenson now says about gigabit access networks, at least in some cases, that "the cost dynamics look good, the revenue implications look good, the market implications look good, so you're going to see more of this over time and I fully expect you'll see us doing markets like this over the next few years."

Skeptics will say AT&T simply isn't serious. Optimists might be encouraged that revenue and cost implications are being looked at it a serious way, and that AT&T recognizes it has to look seriously at whether upgrades of more networks to gigabit speeds are feasible. 

AT&T Wants to Create Multicast Video Delivery Service

It isn’t clear what applications and revenue models would support any new multicast networks using 6 MHz of spectrum (up to 12 MHz in many markets) using the LTE-Broadcast protocol, but AT&T aims to find out.

By way of reference, 6 MHz is enough bandwidth to multicast one high-definition TV stream, or perhaps four standard-definition video streams, or any number of less data intensive test and image information streams.

What probably won’t work is some sort of video service on the model of cable, satellite or telco TV, as there simply isn’t enough bandwidth available, with one obvious sort of exception: the Super Bowl, streamed live to mobile phones.

Beyond that example--high value, highly-viewed events--the ultimate business model likely would be based on some sort of localized datacasting (to mobile users at a major live event of some sort) or other high-value content of interest to users.

AT&T is not the only firm that has been thinking about use of mobile networks as the foundation for video entertainment delivery.

Many observers might argue that Dish Network’s plans for Long Term Evolution would rely, to some significant extent, on delivery of video entertainment. That could take several forms, giving Dish its own facilities-based way to supply paid-for broadband access (mobile or fixed), and then the ability to create a national video streaming service over the top of the access connection.

The spectrum AT&T plans to use originally was used by Qualcomm to support its now-shuttered MediaFLO service.

60% of U.S. Mobile Phone Users Access Internet from Their Phones

About 60 percent of all U.S. mobile phone users make use of their devices to access the Internet, according to the Pew Internet and American Life Project. 

Fixed Broadband Prices Have Dropped 82% Over 5 Years

Over the past five years, fixed broadband prices as a share of gross national income per capita have dropped by 82 percent, the ITU says.

In 2012, fixed broadband services remained expensive, though, accounting for 30.1 percent of annual monthly incomes in developing countries, compared to just 1.7 percent in developed countries), By the end of 2013, there will be more than three times as many mobile broadband connections as there are conventional fixed broadband subscriptions, according to the  International Telecommunications Union’s State of Broadband Report.

In 2012, the number of developing countries where broadband cost less than five percent of annual income remained the same as in 2011, at a total of 48.

In 22 developing countries, prices ranged up to two percent of average income, while in 26 countries prices were between two percent and five percent.

The point is that people can afford broadband when it costs less than five percent of their annual income. That implies that fixed broadband access is unaffordable for 3.9 billion people, and mobile broadband is unaffordable for over 2.6 billion people around the world.

The number of developing countries where broadband cost between five percent and 10 percent

of average income has increased from 15 in 2011 to 24 in 2012, the ITU says. In 18 developing countries annual cost is between five percent and eight percent of annual income, while in six countries broadband cost is between eight and 10 percent of annual income.

In 49 economies in the world, primarily developed economies, broadband access in 2010 cost less than two percent  of average income.

This compares to 32 economies in the world in 2010 where broadband access cost more than half of average national income.

In 2010, there were 35 developing economies (out of 118) where broadband access cost less than five percent of average monthly income, up from 21 two years earlier.

Current ITU development goals include a target of entry-level broadband services, available at less than five percent of average monthly income, in developing countries by 2015.

By the end of 2013, the number of broadband subscriptions in the developing parts of the world will exceed the number of broadband subscriptions in the developed regions of the planet for the first time, the ITU also notes.

Licensed spectrum has underpinned the growth of the mobile industry and remains essential, unlicensed spectrum (Wi-Fi, primarily) has become an important part of the way people get access to the Internet.

Other forms of spectrum sharing also are starting to get attention.

Mobile broadband also is the fastest growing technology in human history, according to the ITU.

By the end of 2013, the ITU predicts there will be 2.1 billion mobile broadband subscriptions in use, equivalent to one third of the total number of mobile cellular subscriptions in service globally. In 2011, mobile broadband was used by 20 percent of mobile customers.

Morgan Stanley estimates that the number of unique smart phone users is around 1.5

billion in 2013, with smart phone subscriptions estimated to exceed four billion by 2018. Mobile broadband is projected to reach seven billion subscriptions in 2018.

Mobile broadband subscriptions, which allow users access to the Internet from their smart phones, tablets and WiFi-connected laptops, are growing at a rate of 30 percent  per year, the ITU says.

Telefonica to Own Most of Telecom Italia

Telefonica will boost its stake in Telco, the holding company that controls Telecom Italia, to an initial 65 percent with an option to bring the stake to around 70 percent, according to Reuters.

Telefonica already own 46 percent of Telco, representing in turn about 10 percent of Telecom Italia shares. Telefonica says It will boost its stake in the Telecom Italia to nearly 16 percent.

Telefonica is set to acquire its additional shares from the other Telco shareholders, including Italian banks Mediobanca, Intesa Sanpaolo,  and insurer Generali.

The move might well be viewed as part of a coming merger wave in the European telecom market.