MVNOs take off in France

According to the French NRA, the ARCEP, the country reached a 82% penetration rate end of Q1 2007 with a total of 52M active accounts, including overseas regions and territories.
This base grew by 7% over the last 12 months : 4% for MNOs, and a solid 302% for M-VNOs, whose market share eventually took off from .91 to 3.42%. During Q1 2007, they even snatched 11.5% of net sales for prepaid and 15.8% for postpaid.
The percentage of users of multimedia services remained stable at 29%, and the number of SMS by active users at around 30 per month. But ARPU didn't nose dive (EUR 36.4 / month, -6%) because voice remained strong : traffic gained 14% and call termination wholesale cuts didn't kill the golden goose. But Viviane Reding's roaming wars haven't started yet. And French M-VNOs are not voice killers. Yet.
Even price-centric M-VNOs (ie Tele2 Mobile, over 350k subs) or mass retailers (Auchan Telecom, Carrefour mobile) can't go far. Data-centric Ten or M-VNOs with an ethnic / geographic focus (MobiSud, Breitz Mobile) won't bring the whole house down. Nor will such players as Coriolis or Transatel. "Entertainers" NRJ Mobile and Virgin Mobile play the card of rates a more subtle way, offering more for the same price. Both are enjoying a good position on the market (over 300k subs), the latter contributing to the success story of Omer Telecom, the Phone House / Carphone Warehouse VNO behind Breizh Mobile and the Virgin Mobile JV.
But triple- / quadplayers hold the best entry points as mobile voice rates start converging with landline ones, as mobile and landline start making one. neuf cegetel started ahead of Free Iliad, but Orange and SFR, now also an ISP, won't let their market share shrink that easily. The timing seems definitely interesting for the sale of Bouygues Telecom*.

* see "Bouygues not for sale ? How about TF1 ?" (20070509)

MVNO frenzy and extreme hangovers

Sprint welcomes another MVNO, and the utterly bankable KDDI Mobile brand has a crystal clear ambition : selling more Kyoceras in the US.
Meanwhile and closer to Japan, Google Phones are being made in Taiwan by HTC and cobranded by the MNO. The utterly bankable Google brand is definitely not meant to become a MVNO. Yet.
The so nineties Blyk concept is gathering an impressive pool of advertisers for its pan-European launch on Orange networks.
The so eighties Sonopia's DIY MVNO / MVNE concept is gathering an impressive media coverage. Get cool calling cards with your company's logo, grow as big as AT&T in less than two weeks... ego will sell this summer.
But the so Y2Ks WiFi - 3G PC Card concept doesn't sell : Helio Hybrid ends a partnership with Boingo going airbuso...
The MVNO primaries are definitely not over, but Amp'd clearly feels a Joementum - I don't have New Hampshire's figures (nor Canada's, for that matter), but this natural born winner is approaching the 200,000 subs mark (100,000 EOY 2006), with a 84% postpaid customer base (just slightly down from 89%), and ARPU remains strong at $100. Do you want the sign that says "purchase me right now" or the one that reads "wanted : Vegas wedding chapel" ?
Someone must clean this crowded place one way or the other, even the most extreme. Fortunately, ExtremeMob (extrememob.com) is not the mafia's MVNO but the result of a deal between Xebra Limited and Vodafone UK. This fall, Extreme Mobile Limited will target the X generation with all the Weapons of Mass Disruption of the Extreme Media Group (extrememediagroup.com) : Extreme Sports Channel, Ex Publishing, Extreme Entertainment (content), Ex Events, Extreme Retail and even Extreme Hotels, Extreme Parks, or Extronics. "ExtremeMob is more than just about extreme sports, it’s about being an integral part of the lifestyle of under 24’s". The handset shown in the press release goes with an extreme headset, and the said "under 24's" may go with an extreme hangover thanks to Xebra's Extreme Drinks.
ExtremeMob can claim the Pole position : Xebra was recently purchased by Centernet / NFI Midas.

Helio to hit 100k subs, and to be hit by Earthlink's 10K

According to Helio / Helio powered by SK Telecom, the Hollywood MVNO is "on the path to surpass 100,000 subscribers by early in the second quarter of 2007" (NB : 10 month after launch) and claims an "ARPU of over $100 per month", 25% of which from data services. The proof of concept for their device driven innovation strategy reads in some interesting figures :
- a WAP penetration of over 85%, an average 400 SMS per customer (merry Xmas - those were the stats for December 2006 so you won't get any data regarding the recent launch of Helio Music) - over 70% of Helio members use MySpace Mobile
- over 80% of Helio Drift members have downloaded GPS-enabled Google Maps™ for mobile and about 70% have downloaded Buddy Beacon


According to Earthlink's 10-K, Helio Inc as well as Helio LLC (the opco) are Delaware corporations. This isn't Tinsel Town and the balance sheets are not unleaded. Up to now, each partner has spent $214M in cash and non cash assets ($40M for Earthlink's 27,000 wireless subscribers transferred in 2005, along with equipments and other assets). Each partner will spend 6 more millions in August but beyond that, there is a big question mark.

One thing is sure : the company will keep losing money for a while. Big time, because this is cellular business and even for a M-VNO with a low CAPEX, S curves tend to develop fat bellies. FYI, 2006 revenues reached $46.58M with a full launch in July (68.7% service, 31.2% equipments and other) and accumulated deficit stood at $233.7M. Provided ARPU remains at the same high-usage-low-hanging-early-adopter level, 100,000 subs would mean $120M, and an average customer base of 150,000 over the year would barely match 2006 OPEX ($186.5M). Not only does EY have "substantial doubt about the Company’s ability to continue as a going concern", but even a massive success of HELIO would only make things worse in the short term (acquisition costs).

SK Telecom and Earthlink own each 47.8% of the operation. Earthlink can't afford losing money at this pace for long, and SK Telecom could seize the opportunity to take a clearer lead. Or to bring in one ov'em "potential outside investors" (up to now, "outside investors" represented "approximately $8.0 million of funding").

At this stage and especially after the recent US-Korean FTA, I don't see SKT pulling the plug that early. Even with such a fierce competition, it wants HELIO to "achieve or maintain adequate market share or revenue or compete effectively". One one hand, we should see more "Helio powered by SK Telecom" (MySpace's exclusivity is over and the Cyworld brand could blossom beyond the platform). On the other, SKT won't wait 25 years to welcome HELIO's 3 millionth customer.

The fun is just about to start.

mAdSense and Google Phonies (Google Phones ?)

"Don't Be Evil" is embedded in Big G's DNA. They said we were the next Microsoft, they now say we are the next Apple. But we neither want to rule the hardware / OS entry point nor rule the hardware / DRM entry point. Do we ?
One thing is sure : if Google's plans remain evasive, their ambitions remain pervasive. And mobility a must have, whatever the path. Speculations, analysts and pundits keep fueling expectations (gPhone, WISP, M-VNO, VoIP, WiFi, WiMAX, mobile suites...), but Google shouldn't care about it.
... if it weren't for its shareholders... I don't want to spoil the party but $462 per share and $143 bn overall look like a lot of dough to me. Like that insane, neverending hike in the Vietnam stock exchange, not even dented by the Shanghai hiccup.
Come to think of it, the ultimate stage of mobile advertising by the king of online advertising will be called mAdSense.

What else ? The CeBIT is over. Which means it was open before. Talking about bomb news : cellcos are eventually realizing the golden years of mobile voice ARPU will soon be over and the bulk of mobile data is bound to go flat. At last.

What else ?
- BT and KPN are working on M-VNOs in Spain. Belgacom, Swisscom, Eircom declined to comment.
- Viviane Reding wants DVB-H to outperform Galileo and Airbus across and beyond Europe. China already decided to launch a competitor to Airbus and Boeing, another to 3GSM and cdma2000. Why not split from Europe over the GPS-killer / killee and why not launch a specific mobile.TV.cn ?
- The WiMAX Spectrum Owners Alliance (WiSOA) wants to promote both WiMAX roaming and the survival / resale of its exotic founders
- I'm still stuck with a broken foot and a broken club - I can't move and Paris Saint Germain keeps sinking towards second division. Mobility definitely sucks.

free without Boukobza

Mickael Boukobza, who brilliantly ruled for 7 years over the development of France's most disruptive player in the telecom arena, will quit by this summer. His successor took part in some of TF1's most exciting moves beyond its core business (TPS, Metro, production...). A protege of Patrick Le Lay, Maxime Lombardini leaves the TV giant just before his boss retires, and joins Iliad at a rather exciting moment : here, the whole business is about to venture in unknown territories.
free should easily reach its target of 2.8 M ADSL customers EOY 2007*, and 4 M EOY 2010 doesn't seem a totally farfetched goal... It's just that the competitive landscape and the nature of the job are bound to change with WiMAX and FTTH (not to mention 3G**). It's just that you'll have to be strong to make it in the convergent, troubled, boost or bust times ahead.

The capacity to deliver, but also to anticipate and to evolve quickly have been free's trademarks under Boukobza. Let's see if this survivor of the internet bubble manages to reach yet another level with a different player at the joystick.

* EOY 2006 : 2,278,000 - 75.9% undbundled - ARPU EUR 34.5
** see previous episodes : "3G license part III - France's fourth wedding or a funeral ?" (20070309) "3G & 4G - WiMAX flirts with ITU " (20070303) "Free WIMAX and quadruple play" (20051226)

Subsidies - 2nd Korean Wave

KTF ignited Korea's second round of handset subsidies* and SKT followed yesterday. Consumers don't quite understand the sophisticated grids proposed by the operators but the message is clear : you'll get more if you're a loyal big spender.
For example, at SK Telecom, you're still offered 70,000 wons if you joined the company during the last three years and if you spend less than 30,000 wons per month... but if you've been a client for over 8 years and spend over 90,000 wons per month, subsidies reach 240,000 wons and that's a 26% increase since March the 27th.
People who joined the back-then-not-yet-broad-bandwagon in '96 and spend about 80 euros per month are either business users or deep pocket early adopters (if not both) : core targets for such expensive next gen devices as DMB handsets.
The thing is SKT badly need to boost subscriptions to TU media and its business flavor TU media Corp**. End of March, almost all SKT consumers had WAP enabled (99.5%) and color (92.8%) phones. And it looks as if not everybody will need 3G (unless the operator gives up 2G) : EV-DO penetration reaches 44.6% (of which 90% are June enabled), but the score was already 38.3% end of March last year and SKT started before Japan's KDDI, a 96% 3G cellco***. The same could be said about Nate - active users stuck around 55% of the customer base.
Actually, from a wireless ARPU point of view, I'm not sure TU is such a great booster. But far beyond, the transformation of the cellco into a powerful multimedia broadcaster and content provider remains impressive.
SKT's other growth engines require time : m-commerce becomes mainstream (and it shows in ARPU), but international operations remain quite small (of the 20 M global customer bases, 19.7 M live in Korea...). We'll see how Helio** performs in the US.
And we'll aslo see how KTF performs in Korea with W-CDMA and his new international partner NTT DoCoMo...


* see "Saving private Korea Inc - back to subsidies, but no way back" (20060326).
** see previous posts on SKT's S-DMB service (TU) and US M-VNO (Helio).
*** even if you cannot compare the circumstances : SKT a leader in a pure CDMA country, and KDDI a CDMA laggard in a PDC country (who became #2 thanks to an aggressive 3G strategy).

SK Telecom - the year of the milking cow

I must confess financial data tend to bore me. SK Telecom's figures for 2005 look nice enough, even after retracting SK Teletech's sale*.
Considering the competitive circumstances, keeping a 50.9% market share and adding 750,000 subs inspires respect. The success of Wireless Internet (26.6% of all cellular service revenue) should be tampered by the vastness of the definition of "wireless internet", but no one can contest the achievements of MelOn and Mobile Cyworld, or the ingeniosity of the MNO's data plans.
2005 was yet another exciting year for them (even when followed from this not so exciting blog), but also a year of restructuration with spectacular changes in management and a significant marketing rationalization (the marketing expense to sales revenue ratio went down from 17.2% to 19.2%).
2006 should be less juicy from a financial point of view : SKT must invest in HSDPA, face the competition of DMB-T and Wibro at home, and push abroad... but the year could prove much more exciting from a strategical point of view, especially in the contents / partnerships arenas and in the US**.

* see "Hardware behind, hard work ahead" (20050504)

** see "Hello HELIO - here comes the sun" (20051118)

The ultimate wireless killer app ? Ask Stephen King

Since you are a cellular network operator, worrying about health issues is part of your daily job and responsibility. You also have to cope with irrationality and urban legends but come January 24, 2006, you will regret those peaceful days.
The launch of the year has of course something to do with entertainment but not with TV. Yet.
Stephen King is releasing "Cell" on January 24, 2006, and you don't want to consider that a minor event. We're talking millions of fans reading about a genuine killer application : over the air signals that turn your dear customer into something even scarier than a churner. You'd better prepare your hotlines for this crisis.
Otherwise, the King of ARPU (Average Reader Per Universe) could become your worst nightmare.

PayPal m-pilots and 90s revivals

Bango didn't wait one day and the beginning of the Mobile Content World forum to announce their implementation of PayPal. The M-content enabler had to surf on the other news of the day (eBay putting their hands on Skype).

A couple of months ago, operators would pull the plug on Simpay (analyze this : pulling the plug on a wireless project) and now, in a weird late nineties revival, mobilecos are talking next gen networks and fearing for their golden geese (screaming to the top of their lungs they might lose their dear voice ARPU) while ambitious dotcoms are splashing headlines with megabuck megamergers. The same dotcoms with about the same indecent market caps (eBay, Yahoo!, Google...), followed by the same usual suspect (Microsoft).

But this time, they're not only using paper which may end down the drain : they're laying actual greenbacks from actual profits. Even better : consumers are using their mobile payment solutions.

madult content : follow the .$$$

What domain extension could follow .xxx but .mobi ? At the crossroad, Informa proposes new estimates for the global market for adult content on mobile devices : US$2.3 billion and 114M regular users by 2010. Informa plays it safe thanks to the following warning : "However, this figure is only expected to be realized if mobile carriers and content providers work with regulators to determine solid controls and age verification procedures".
If we say these regular users will represent 40% of all users and 90% of the pie, we're talking a $8 ARPU for all users and a $18 mark for hardcore madults. As far as age verification is concerned, some operators could follow Daum : parents open accounts for their kids and other people cannot send anything to their mailbox without answering a few questions. A great firewall against spammers but Korea's Ministry of Information and Communication went even further.
Spammers' e-mail and fixed line phone accounts will be stopped and convicted spammers and felons will be prevented from opening new ones. That is provided e-mail services adopt new rules and ask for the subscribers' real names... I'm sure shareholders will love to see the fall in subscriptions.
Mobile operators are not concerned yet but there was already an opt-in solution : no e-mail marketing is allowed without the victim being consentant. Great protection indeed : I receive an average 100 spam m-mails a day and according to Cetizen, 95% of mobile subs are still enjoying m-spam.

Humble pies and compulsive eaters

End of June, WCDMA and CDMA2000 1x claimed respectively 28,3 and 186M subs (still no split for 1x EV from the CDMA Development Group), which means since our last count, one semester ago the global 3G market* grew by one third and 3GSM's share didn't take off dramatically (from 10 to 13%).
CDMA is still leveraging on its key asset (compared to GSM-WCDMA, migration remains a piece of cake for operators), but the phenomenon is reaching its limits : "3G" now represents 3/4 of the global 256M CDMA subscriber base (only 2% for the 1,430M GSM family, not to mention the other technos joining WCDMA). Besides, WCDMA is just gaining momentum and will eventually make it in Korea with the help of HSDPA, for which KTF and SKT just agreed on a march 2006 launch**. Even in Japan, FOMA is catching up with 38,7% of the 3G market... less than 2G laggard KDDI but 12 times better than Vodafone KK...
Well. I'm getting nowhere. This WCDMA vs CDMA2000 thing is getting boring. What matters now is what's growing out of this pie.
You'd better focus on players used to claiming leadership beyond the mobile market. While maintaining a market share acceptable by the regulator, SK Telecom claims 10M subs for NateOn or 14M for Cyworld. Their S-DMB service has seduced 75,000 subs within 2 months and still expects 600,000 by the E.O.Y. If you remember, that's far ahead of MBCO's DMB service : MobaHO! reach only 10,000 after 3 months, a poor score for a consortium of 90 companies (including SKT). Beyond the glamorous "Take Out TV", TU Media basically remains a mobile phone and the usage of the service logically contributes to the operator's wireless data ARPU, but this shouldn't be always the case. Let's see how stats will be kept when other accesses appear, when actual new biz starts.


* Well that's the 3G market defined as the sum of the two most relevant IMT-2000 technologies implemented by cellular operators : TD-SCDMA's been delayed again, and neither EDGE nor DECT can be considered 3G. TDD has been implemented but not in the right spectrum yet.
** SKT's HSDPA rates are as follow : 16k wons per month (about $16) for the charge and 2 to 3 megs for the bits. Manufacturers will make sure handsets are on time for the World to see. For the moment, Koreans see WCDMA attracted 3,000 customers in 20 month including such "customers" as the operators' staff and partners...

2005 : how about Europe ?

So 2004 is over, with WCDMA reaching the 16M user mark globally (up 60% since end of Q3), essentially thanks to three players : DoCoMo (migration speeding up in Japan), 3 (cheap voice sells and there's no better way of attracting stupid European men than displaying some soccer action) and Vodafone (at last at ease with marketing). As expected, the technology is starting to catch up with CDMA2000 (145M users end 2004, up from 100M in july, thanks to 107 operators covering 53 countries) : WCDMA just represents 10% of the total 3G customer base, but already 32% of Qualcomm's Q4 royalties (up from 12% one year earlier). And doc Jacobs is speeding up on HSDPA.
But Qualcomm are also investing in Europe, and a much clever way than they did with Dolphin (a genuine TETRAgedy). The cdma family is saved, Brew enjoys its own market like any Microsoft me-too product, and the battle may well move closer to the enduser. Look how Mr Q purchased Europe's Trigenix, a specialist in user interface. Look how they sell their mobile broadcasting MediaFLO techno in the US : it's all about user experience (no progress bar, less consumption, easy shuffle...), at a time when Orange marvel at the daily 25 mn their Orange Intense early adopters spend on live TV in France... but don't realise yet this may not be the best technology to perform this basic task.
Another interesting move, from Asia to America this time : the SK-Earthlink JV, a MVNO projecting 3M subs and a $2bn turnover by the end of 2009. Smart move from both players - a perfect match in a coopetitive world. The days of the merger with Mindspring long gone, Earthlink claims about 5M subs and its wireless MVNO experience shows a strong focus on business and data services. SKT has it all, plus the wireless expertise, the consumer focus and the entertainment touch. Wireless internet services represented 20% of their 2004 ARPU, almost 24% during Q4 (24%, that's about the percentage of the mobile users who had some mobile multimedia experience beyond sms in France !). Yet if they want to implement all their success stories in the US, SKT should expect some resistance from powerful lobbies (ie banks vs Moneta, music majors vs MelOn...). But they survived portability and managed to gain more than 400K customers last year. And succeeding in the US is a strong commitment.
How about Europe ? There was a time when its players ruled 2G. Before the 3G licensing madness, a few did have some vision but much too early and with the wrong priorities (remember Telefonica ?). So forget about an aggressive agenda in Asia or in the Americas. But who knows ? Sometimes it pays not to be the first to blow a bubble.

Neck plus ultra

Step by step, TU media is making DMB history :

• SK Telecom launched their satellite last march but it took them almost a year to launch a preservice for early adopters - but don't blame this master of TTM for the delay : regulatory hurdles were tough (actually, SKT literally had to build their own arena to make sure the race would start before competitors were born).
• for a week now, TU media preservice has been freely providing 3 video channels already familiar to June customers (Music with m-net, News with YTN and Drama with SBS Drama and MBC Drama) plus 6 audio channels. Ads have been running featuring a man pushing a shopping cart while his son's enjoying a show on the horizontally turned 5.5 cm screen of the Samsung SCH-B100 hanging from his father's neck. With mini mobile theaters, it's not about the audience doing some necking when the lights are out - it's about the theater itself ruining the owner's neck.
• That's a 622 euro (850,000 W) theater and batteries are supposed to run for 150 mn of intensive usage : forget a LOTR marathon or handset subsidies (the latter forbidden by the government). And Koreans also have to invest in digital TV : already 15% own it today for a projected 48% end 2007 according to the Electronic Industries Association of Korea...* More devices (including in-car sets) will be available by may, when overall 14 video and 24 audio channels are broadcasted (the first 3 data channels are scheduled for 2005).
• The access fees will then cost about 14.6 euros per month (20,000 wons) and SKT expects a 9.5 euro (13,000 wons) ARPU. Not too aggressive a business plan considering today's wireless internet ARPU for SKT's WI enabled handset owners (about 6 euros according to their monthly stats). SKT's partner in Japan MBCo launched their DMB service last october and claims a lousy 10,000 subscribers but they solely provided in-car devices and don't have the marketing power of Korea's leader. SKT expects 600,000 subscribers end 2005 and 5.6M end 2010. Not aggressive either : that's the equivalent of 3 and 30% of their customer base and it took much less time for them to equip 6M people with EVDO handsets.

How about cannibalization, then ? That's the big issue... but that's also the way this first mover is keeping its edge. Stephane MOT

* while we're at it : Korea remains at the top for broadband access among OECD members (24.08% equipment rate - to be compared to 15% for Canada, the distant runner-up). If you are to believe last NIDA poll, 69.3% of all Koreans already used the internet at home back in june 2003 (55% through xDSL and 9.5% through CATV), 46.3% managed more than one e-mail address (and 12.6% their own homepage - thank you Cyworld). Wireless internet usage reached 36.1% (over 83% for the 12-19 year olds), and among users 53.4% paid for premium sites and 21.2% did some m-shopping (74.5% for downloading stuff but already 14.3% for clothes, groceries or food).