Rail crash? You wait until they try to auction the 4G mobile phone spectrum

October 4, 2012

Business groups have launched  a scathing attack on the Government over the 4G spectrum auction and say it has revealed serious problems at the heart of public sector procurement. Simon Walker, director general of the Institute of Directors, expressed a typical view: “It is shocking that such a crucially important process has gone so seriously wrong. Businesses need a stable, reliable telecoms network and certainty in the provision of key infrastructure.” “Procurement mistakes increase risks for companies, threaten jobs and harm Britain’s reputation as a destination for inward investment,” added Adam Marshall, policy director of the British Chambers of Commerce.

Just joking. I’m sure Messrs Walker and Marshall will forgive me for quoting them out of context this once; after all, I’m investing them with seer-like prescience. Their cited words are real, but in fact relate to the very clear and present danger of the West Coast Main Line rail fiasco. The fallout from that will be a moon-cast shadow compared to what will happen if HMG manages to screw up the mobile phone spectrum in the same way it has screwed up our railway network.

As it happens, there has been some relatively good news on the 4G front recently. Maria Miller, the obscure former Grey advertising and PR executive recently catapulted to culture, media and sports secretary, has made a brisk start to her tenure by bringing forward the inexplicably delayed auction date of 4G spectrum to January and cutting through the legal wrangling among telecoms carriers which has deadlocked the introduction of the new, much faster, mobile phone standard to the UK.

But will her timely action be enough to avert a looming disaster? First, a little background. 4G is not some minor incremental improvement on the current standard, 3G. It can offer speeds of up to ten times that of the average current home broadband service. Data-hungry yoof, but more importantly business people and commuters, will love it. Miller herself observes that its introduction is “a key part of economic growth strategy” and will “boost the UK’s economy by around £2-3bn” (growth at last – the stuff that George Osborne’s political dreams are made of). America’s already got it, Apple’s got it, Germany’s got it, Korea’s got it. For God’s sake, Estonia’s got it. Britain, which prides itself on being at the heart of the digital revolution, has not. Why not? Because of years of government dithering over the auction structure. Gordon Brown made a bit of an idiot of himself by appearing to hand out the lucrative 3G spectrum to the telecoms carriers for a song. Successive administrations since have been determined not to make the same mistake twice, but seem uncertain how to prevent it.

Now events have caught up with them. The situation is complex, but distils down to a simple reality. Apple has launched its latest ‘must-have’ iPhone with a 4G capability that no one in the UK will be able to take advantage of in the near future. Well, almost no one. The exception: those who use EE, as of October 30th. Er, let me qualify that. No, not all users of Orange and T-Mobile, the brands which have had all their resources pooled into the Everything Everywhere receptacle (or EE, as it is now known – what a whoopee cushion of a brand name). EE itself has the exclusive iPhone 5 franchise, and only new subscribers, not old customers, will benefit from the 4G offering. Everyone else – that is, the vast majority of UK mobile phone users – will have to wait at least 8 months to subscribe.

It may well be objected that what gives the EE brand a timely ‘digital’ lift is actually brand suicide for the company’s premier and better known brand, Orange. But that’s one for UK chief executive Olaf Swantee and his strategy team to worry about. In the meantime, they can congratulate themselves on having – unlike their competitors – farmed existing spectrum to make space for the 4G platform. A merry Christmas is assured, thanks to the exclusivity of their iPhone 5 4G contract.

Once EE’s rivals, O2, Vodafone and Three, realised what Swantee was up to, cries of  “Unfair” and “Unlevel Playing Field” were heard to rend the air. EE had played the ant in Aesop’s fable, and harvested its existing resources wisely, but the grasshoppers were beside themselves with rage that they would have to wait another six months to grab their share of the new spectrum via a dilatory government auction – and then some before the service could actually be implemented. What’s more, they were prepared to act decisively: they threatened to blunt EE’s leading edge with legal action. That might have been explicable in terms of competitive advantage and buying extra time to build the necessary 4G infrastructure. But as a prelude to launching the 4G standard in the UK, it would have created a public relations disaster. How do you explain to an iPhone-crazy public that access to much higher broadband speeds is being blocked by red-tape, selfish industry interest and legal chicanery?

Miller has therefore done well to defuse the legal wrangling by agreeing to bring forward the spectrum auction date 6 months to the end of January. But implementation of the 4G dream is still a long, long, way away for most of us punters – we’re talking at least the latter end of next year. In the meantime, all sorts of teething problems will need to be sorted out: poor signal distribution, patchy network coverage, a quite possibly incompetent auction process that leads to further legal action and, let’s not forget, potentially incompatible 4G phones.

“Wrong spectrum”. We’re going to be hearing a lot of that in the next 12 months, while the phone companies sort themselves out. If my mobile phone contract were coming up for renewal (which it is not), I would be very tempted to let it ride until at least the beginning of 2014 …

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Mindshare beats Carat to €150m SFR media-buying and planning account

August 1, 2012

Word reaches me that Aegis’ Carat has just lost one of France’s biggest media accounts to WPP’s Mindshare. SFR, the mobile phone carrier owned by Vivendi, has a media budget of about €150m (£120m). Overall, it is one of France’s biggest advertisers, ahead of Orange, but behind Renault, with a total budget of about €300m.

For WPP, it’s second time lucky. In 2009 a joint-ticket of Mediaedge-CIA and Mediacom got into the final frame of a review, but was seen off by Carat, which has now been the incumbent agency for about 15 years. OMD and Zenith-Optimedia also participated in the 2009 pitch. It is not known whether other agencies were involved in the current one.

SFR, which offers fixed line, mobile and broadband services, spends the biggest part of  its advertising budget on television – about €92m last year. Next comes outdoor, with a spend of €65m, then digital, with €62m.

Separately, Carat will have been shaken by the news that Joel Ewanick, the man responsible for placing General Motors’ $3bn global media account in their hands, has been abruptly fired by his company.

Earlier last week, John Gaffney, who led Carat’s North American General Motors account out of Detroit, quit the media agency. The circumstances surrounding Gaffney’s departure are unclear. Some sources maintain his departure was related to client dissatisfaction with Carat’s performance. Others more directly connected to the situation insist Gaffney’s exit was not directly related to performance on the GM assignment.


Nokia, Microsoft and AT&T hold their breath for Lumia 900 smartphone launch

April 9, 2012

Like me, perhaps, you missed one of this year’s most critical product launches. That’s because, for reasons still not entirely apparent, it took place on Easter Sunday.

Never mind that though. All the most influential tech reviewers are agreed: the Nokia Lumia 900 is undoubtedly one of the finest smartphones money can buy, with its big, 4.3in screen, intuitive operating system, 8 megapixel rear camera and VGA front-facing cam, not to mention 4G LTE data capability. And at the astonishing price of only $99 (terms and conditions apply, 2-year contract only, sorry rest-of-the-world, you’ll just have to wait and see…), it looks like a snip.

But will it be? The Lumia’s significance lies not so much in it technological prowess as who’s behind it.

This may be the first and only chance for Nokia, Microsoft and AT&T to break the iPhone’s increasingly assured stranglehold over the sector. Nokia, once hailed the world’s leading mobile phone manufacturer, has so far made almost no impact in the dynamic smartphone sector dominated by Apple and Google/Android. Microsoft, developer of the admired but definitely connoisseur-only Windows Phone 7.5 operating system, has so far lacked a suitable vehicle to gatecrash the market. And AT&T, the US carrier with sole Lumia launch rights, is playing a desperate market catch-up game with its rivals Verizon and Sprint Nextel, after earlier losing exclusivity over US iPhone sales.

Little, apart from that quirky Easter Sunday launch date, is being left to chance. And with some of the world’s powerful brands behind it (AT&T, for instance, is America’s second biggest advertiser) it seems hard to conceive of abject failure. AT&T alone is spending $150m through BBDO on the Lumia launch campaign – more than it ever spent on the iPhone. And there has been much hullabaloo in Times Square with a spectacular live event – watched by “tens of thousands of people” and videoed on Facebook – featuring 60-foot CGI-generated waves which cascade down a building.

If only smartphone marketing were simply about price, position, product and promotion, the Lumia 900 would have a field day. Alas, it’s also about apps. As a leading member of the tech commentariat David Pogue, of the New York Times, points out:

The Lumia 900 is fast, beautiful and powerful, inside and out. Unfortunately, a happy ending to this underdog story still isn’t guaranteed. Windows Phone 7 faces the mother of all chicken-and-egg problems: nobody’s going to write apps until WP7 becomes popular — but WP7 won’t become popular until there are apps.

And it’s anyone’s guess when that might be.


Apple outsmarts its competitors

March 31, 2012

Unmistakable stress signs among competitors appear to herald a tectonic shift in the smartphone sector – to Apple’s advantage.

One rival RIM – maker of Blackberry – has retired hurt from the consumer ring. Another, Apple’s principal adversary in the field, is having to carefully rethink its ‘open-door’ strategy.

No surprise, perhaps, that the cracks are appearing at RIM, which has been heading for the casualty ward almost since the iPhone first appeared. After a disappointing financial year and downright disastrous Q4, new RIM chief executive Thorsten Heins has cleared out most of the old guard, including former co-CEO Jim Balsillie – still on the board – as well as the COO and CTO. And announced at the same time that RIM is all-but jettisoning the consumer market in favour of the business and public sectors.

At very least this means RIM will cease to develop content and music services. But the strategic review could signal a lot, lot more where that came from. Why exactly should business and government be interested in propping up the failing Blackberry brand, just because consumers aren’t? Even if they are, would RIM – so pared – still be a scalable global business? These are two of the questions Heins has, understandably, failed to answer so far. And yet, even at this stage, he has admitted that the future is “outsourcing” and possibly a trade sale. Echoes of Palm here, the PDA innovator which – despite a superior operating system – was eventually gobbled up by Hewlett-Packard.

More nuanced than Blackberry’s rout is Google’s response to worsening sales figures in the most hotly contested smartphones sub-sector, tablets. Here, Android-powered product is being squeezed by the exotically priced but more glamorous iPad (entry-level, $399) and the bargain-basement ($199) Kindle Fire, made by Amazon.

Reportedly, the search and smartphones titan is preparing to sell Google co-branded tablets directly to consumers through an online store.

That shocking, you say. So what?

Superficially, Google adding its awesome brand to the Android-powered tablet platform looks like a sign of strength. But that’s not what the techno-commentariat to a man and woman believes is behind the move.

On the contrary, they say, Google is attempting to shore up its position in a fracturing market. Unlike Apple, which maintains a dictatorial control over its operating system at all levels of innovation, manufacturing and distribution, Google has always favoured a laissez aller approach. By opening up its Android operating system to outside manufacturers such as Samsung, HTC and ASUS. This strategy has the merit of reducing development costs and potentially speeding up market penetration, with the corollary of making a killing in the apps field. If it succeeds, that is. But the downside is a lack of quality control; meaning that the Android brand and, indirectly, Google will be tarnished by the poor performance of its weakest collaborators.

It is this perception of fragmented user experience that has driven Google to intervene more directly in the market by taking over distribution.

With what effect we shall see. Commentators have been quick to point out that Google has tried this stratagem before, with the HTC-manufactured Nexus One smartphone.

And failed. The co-venture was shut down in mid-2010.


“Silly” remark by Everything Everywhere chief lets slip truth about T-Mobile brand

October 26, 2011

Dear Mr Swantee

How do these female Telegraph journalists do it? Trap you into saying things you didn’t really mean to say, that is? Not many months ago, Mr Cable was silly enough to tell two such hackettes that Mr Murdoch’s empire was thoroughly evil and that he was going to put a stop to it, just when he was supposed to be impartially adjudicating the self-same Mr Murdoch’s bid for BSkyB.

Now you, too, have been very silly. Or, to be more precise, you have been caught rubbishing Everything Everywhere, the brand name of the company where you are chief executive.

Here are the very words you used, as reported by the delightful Katherine Rushton:

“Everything Everywhere is not a brand, it’s a silly name with a stopping effect”, he said, although he maintained it was useful for stores which house the two mobile brands.”

Now I know what you’re going to say; in fact what you have said: just like poor old Vince, you were quoted out of context. His context was entrapment; yours we’re going to work on a bit – just in case there’s any misunderstanding.

The first thing I’d like to make clear is that we are all right behind you. Not only do we admire the candour of someone in so senior and responsible a position voicing what we have all long since judged to be a self-evident truth (just, as it happens, we did with Mr Cable). We are also quite prepared to accept that journalists, with their obsession for compression, tend to miss the bigger picture.

I expect, when you were describing your corporate brand as “silly”, what you were really doing was employing a bit of time-honoured rhetorical licence: using the part as shorthand for the whole. It’s not Everything Everywhere the brand that is “silly” with “a stopping effect”, but the brand strategy behind it. That, surely, is the bigger picture that got left out of the context.

Right from the beginning, that brand strategy has been misconceived, hasn’t it?

I mean, the initial idea was all right as far as it went: putting together 2 failing UK mobile telecoms brands in one brand-new holding company and, overnight, transforming yourself into UK leader by customers, ahead of those snake-oil people at O2. What a clever sleight of hand, and one that avoided Orange and T-Mobile experiencing serious difficulty with the competition authorities into the bargain.

The trouble is, your predecessor Tom Alexander wasn’t empowered by his twin masters, France Télécom and Deutsche Telekom, to take the idea any further – and you were left to clear up the mess that resulted. 50:50 ventures never work, do they? Still, you’ve done what you can, within the agreed terms. You’ve swept away all those unnecessary backroom boys and girls, stripped out excess infrastructure, rationalised the shops, brushed up the margins, cleansed the boardroom of useless, nay-saying, former T-Mobile executives and ploughed on with a leaner, meaner Orange team. Yes, Sirree, having worked at HP before you joined France Télécom, you know just about everything there is to know about consolidating tired, low-growth companies.

But one thing they haven’t let you do is to slay the elephant in the room. Yes, I know what you said when you took over earlier this year:

“The T-Mobile customers want a flexible payment and usage system. The Orange customers want a predictable amount paid every month. There is a clear difference.”

But the justification for that difference is becoming less and less apparent, isn’t it? Look at your latest, Q3, figures: pre-paid, plummeting; contracts up. T-Mobile’s days as a UK brand are surely numbered.

Truth to tell, Orange is and always has been much the stronger brand; better serviced too. Maybe, if there hadn’t been all that fudging at the beginning by your corporate masters, then the figures would have been a lot more convincing than they are today. And your brand hierarchy a lot more coherent. Without T-Mobile to worry about, poor old Tom would never have had a nervous breakdown trying to justify the vacuous sticking-plaster of Everything Everywhere – as the best of all branding in the best of possible worlds, when it patently wasn’t.

No wonder you let slip your frustration with a “silly”, unguarded remark.


iPhone 4S launch highlights flaws in Apple’s culture of secrecy

October 5, 2011

The mountain shuddered in labour – and produced a ridiculous little mouse. The mouse in question is the iPhone 4S; the mountain, the hyperbolic rumour machine which would have had us believe, until the very last moment, that Apple was in fact launching the no-doubt-iconic iPhone 5, instead of a mere upgrade.

If the result has been widespread disappointment, the secretive folk at Cupertino, California, have only themselves to blame for their botched PR. Journalists, rather like Nature, abhor a vacuum. And when there is only rumour to fill it – owing to Apple’s paranoid obsession with controlling every detail of a launch – this is the sort of thing that results.

As far as I can tell, the foundation of these “iPhone 5” rumours was some cryptic remarks made by former US presidential candidate Al Gore at the Discovery Invest Leadership Summit in South Africa. Gore is an Apple non-executive director (which is why he was believed) and he let slip that Apple would imminently be launching two models, dubbed the 5 and the 4.5.

I have no idea whether this was simply mischievous misinformation, or Gore himself being ill-informed and indiscreet. Believe me, the latter would not be surprising, even at board level. Apple prides itself on a degree of internal information control, policed by fear, that would have been the envy of the KGB. It’s not your job title that counts in this corporation, but how much you can reliably piece together from your internal contacts just before a big launch. Under a supremely capable autocrat like Steve Jobs, this system of divide and rule has worked well for Apple. It remains to be seen whether his successor, Tim Cook, will be equally successful in manipulating it.

Early signs are not promising. The iPhone 4S, which will appear in the UK on October 14th, may not be the great technological leap forward that was expected. But it is a useful and innovative launch whose value will probably be dissipated in the flotsam and jetsam of deflated hype.

Point one: it embodies Apple’s latest operating system, iOS 5. This, among other things, will give Apple a better handle on technical elements of its Android competition, by allowing customers to access cloud technology that dispenses with the need for desktop computers when downloading music, photos and apps. Point two: the 4S launch will now allow Apple to start offering the older 3GS phone free with a contract. By making iPhones more attractively priced at the lower end, Apple may well be able to blunt Google’s growing stranglehold on the total smartphone sector.

And not before time. Recent research released by Nielsen reveals that, within the UK market over the past 6 months, 44% of smartphone purchases were powered by Android, well ahead of RIM/Blackberry’s 25% and Apple’s 18%.

Premium pricing and its “walled garden” operating system put Apple at a disadvantage when it comes to market share. Interestingly, however, Apple products seem to inspire the most loyalty, with 86% of iPhone users saying they were “highly satisfied” compared to 74% of all smartphone users.

Which is all very well, except you’ve got to persuade the blighters to buy your product in the first place before you can inspire such laudable brand loyalty.

UPDATE 6/10/11: Appropriately, perhaps, the pithiest epitaph to Steve Jobs, who died late last night, can be found on Twitter: “Three apples changed the world. First one seduced Eve, 2nd fell on Newton and 3rd was offered to the world half bitten by Steve Jobs.” Or minor alternatives to the same effect.


Google/Motorola deal opens way for game-changing Microsoft merger with Nokia

August 16, 2011

Say whatever else you like about Google’s $12.5bn acquisition of Motorola Mobile, it’s a landmark deal, defining a new inflection point in the evolution of mobile communications.

How it will do so is another matter. Commentators are widely divided over its ultimate objective or even whether, all things considered, the deal will benefit Google.

Microsoft's Steve Ballmer: Last laugh?

Let’s start with something concrete: the high price. At $40 a share, paid in cash, Google’s offer represented a handsome 63% premium to the smartphone maker’s share price at the end of last week. Even allowing for the currently flustered state of world stock markets, that suggests a measure of desperation on Google’s part to get the deal done.

Why pay so much? Motorola may once have been a great mobile handset brand. But today it commands no more than 2.4% of the market that matters, smartphones – according to analyst Gartner.

Some would suggest that calling Motorola a brand at all is to miss the point. In their eyes, the deal is little more than a defensive gesture, aimed at raiding Motorola’s 17,000 innovation patents. These will bolster the already near-dominant position of the Android operating platform by allowing Google to segue, for the first time, directly into hardware development (tablets in particular). By so doing, Google thinks it will obviate increasingly destructive IP litigation. Mountain View now sees this as the tactic of choice deployed by its principal competitors Apple and Microsoft to slow up Android’s inexorable advance. Like caltrops strewn in the road to block a triumphant cavalry charge.

No less significantly, the Motorola acquisition will enable Google to improve Android user experience. Complete control over a handset manufacturer will mean, in theory at least, fewer glitches (compared with, say, the already intergrated iPhone experience) when it comes to software upgrades. Which in turn means more happy customers and apps developers.

So far, so positive. But, from here on in, the deal looks more risky. Google may not choose to highlight the issue of brand conflict, but Motorola’s competitors most certainly will. And it just so happens that some of these competitors, namely Samsung, HTC, LG and Sony Ericsson, are Android’s most important customers. Without them, their awesome distribution and massive marketing budgets, the “inexorable” advance of Android would be stopped in its tracks. So Google will have to work very hard at convincing them that Motorola will not get first-mover advantage in the event of some major piece of market innovation.

Cynically, Google may well have calculated that Android’s other “carriers” have little choice but to toe the line, there being no visible alternative to its own operating system at this moment.

But that would be to underestimate Microsoft (never a wise thing to do) and what is likely to be the most significant and unforeseen consequence of the Motorola deal. Which is: Microsoft buying Nokia – still the biggest, if no longer the best, mobile phone brand.

That would indeed be an irony. Without the catalyst of the Google/Motorola deal, Microsoft and Nokia might never have been able to convince their shareholders to go the whole hog and commute a peripheral collaboration deal into a fully-fledged merger. With what consequences for Google and Apple we can only guess.


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