Wireless licenses will be auctioned, and the process is expected to be completed three to four months from now, which means that the commercial launch of 3G services would happen by 1H09. To start with, the Department of Telecom would permit up to five operators in each circle to operate. However, the limit is three for metros like Delhi and Mumbai. Government-owned service providers Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL) will each receive a license, gaining a head start of several months over competitors in rolling out 3G services. The license has been allocated to BSNL and MTNL with only one condition: The license fees must be equal to the highest bid made during the auction of licenses. This allocation has given them the advantage in terms of time to market versus the private operators. One could expect, for instance, that MTNL will launch service within four to five months. The government's surprise announcement heartened CDMA operators that worried that the guidelines would only cover GSM services in the 3G market. The GSM version of 2G services here were launched about three years before CDMA. At least two CDMA operators will be allowed to offer 3G services in each license area. The licenses will last 20 years. Spectrum for EV-DO data services will be auctioned in the 450MHz and 800MHz bands, and eventually in the 1,900MHz band, the statement said. Auctions will be overseen by an agency to be appointed by the Indian government.

3G services are all set to give a boost to the value-added service industry in India, which Gartner estimated was standing at about US$1.5 billion in 2007. Going ahead with Gartner estimates, by 2012, every fifth wireless connection would be on 3G and the operators can expect to generate nonvoice revenue to about US$5.5 billion.

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Recent news that the convenience store food chain 7-Eleven is expanding its MVNO service beyond the U.S. and Canada - first to Taiwan and now to Singapore - caught our eye this week. It's just the latest entry in a long line of food stores offering phone service (see the list below), and it got us thinking about what the MVNO model needs to succeed. Even as content-oriented MVNOs have fallen by the wayside, and high-spending MVNOs have either failed or been merged away from their pure approach, simple prepaid phones, SIMs and cards seem to be working just fine for grocery stores across the developed world:

• Tesco based in the U.K., with branches in Europe
• Aldi based in Germany, with branches around the world
• Auchan in France
• Carrefour ranging across much of Europe
• Kroger in the U.S., Canada and elsewhere
• Plus several other smaller examples

In each case, the food store has emphasized cost savings, simplicity or both for its base brand offerings, and it has tailored the phone service to match. High-end handsets generally are not offered, and customers don't get to do much with pictures, video or live multimedia content: They just phone and text at prices close to the bottom of the market. Certainly, these are low-end customers who are unlikely to attract the MVNO players that are providing the access and other services needed by these branded operations. But the match has real synergy on a number of levels:

• People who like to save money usually like to save money on everything.
• Staffing costs for these simple prepaid phones are nonexistent for the food chains, which compares favorably to the costs of dedicated staff at major-carrier kiosks. Similarly, follow-up customer care is minimized by the fact that it is a simple, low-end service, and customers who come in to shop for food twice a week will have little trouble finding the customer service desk with any questions or problems they have. Alternately, they can make use of call centers in the manner of other MVNOs, run by the network operator or run independently.
• Low-end phones, SIMs and prepaid cards can be bought or topped off in an off-the-shelf fashion, such as for the store's other products.
• Unlike many other retail MVNOs, those associated with large grocery chains have the distribution network to really challenge the carriers in terms of convenience and reach.
• Again, as a result of their size and scale, grocery store MVNOs may not need to move up the value chain, because mobile service margins already compare favorably to margins of many kinds of food, and the incremental cost of stocking these items is fairly low.

While we have yet to see any MVNO really challenging for market leadership (and we don't think any ever will), it's very likely that this version of player could have a long "shelf life," to abuse the phrase. What will be truly interesting is to see whether any of these chains exploit the potential for synergy with customers who use their phones and buy their food. The opportunities to gather data and effectively cross-market are both obvious and substantial, and there is some evidence that folks would be less resentful of a marketing attempt through their grocers than they would be of the carriers behind them. Here is where most chains will likely need substantial assistance to execute properly, with either the MVNO or an MVNE. Either of those partners will also need to develop their listening and partnership skills in order to craft out a mutually beneficial exchange.

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A company called ICG (for Internet Connectivity Group) offers digital signage for indoor and outdoor signs. The data is sent to the sign via a 3G network and is cached on the sign to be played later. The company believes it impacts commercial venues more than noncommercial venues because it is able to influence the buyer at the point of sale. Some of the advantages of such signs are that they can offer time- or location-specific information, target buyer segments, be changed very quickly, and be shared among various vendors. The reduced cost of big video screens has made this business model more viable. In addition, the company sends its data during off-peak times of 12 a.m. to 6 a.m.

Some other interesting applications: The service can double as a billable Wi-Fi router with a splash page that enables additional advertising, and potential services include Bluetooth interaction that will enable retail outlets or brands to signal loyal customers of upcoming sales. This can add advertising revenue to the retail store.

This service can also be used in noncommercial settings such as transportation depots (bus stations, train stations and so forth) or factories to relay updated information. Most outside signs already have electrical power sent to them for lighting, and indoor signs can use existing outlets, so powering up the infrastructure is not an issue. Most of the signs are in populous areas where there is 3G coverage. But the wireless aspect takes a lot of the telecommunication wiring costs out of the equation.

This is a good use of 3G technology, and it shows one of the ways that 3G networks will be used other than for peer-to-peer communications. It helps advertisers by enabling them to better target their customers or to influence their buying decisions. Consumer backlash is not expected, because these signs will replace existing signs and they give customers more up-to-date or targeted information. However, because of the portable nature of these signs, they may be put in areas where the residents do not want them and attract some backlash there.

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On 30 July 2007, AT&T announced the availability of its over-the-air (OTA) music service in cooperation with eMusic. The service will provide DRM-free, PC and handset delivery of eMusic's library of 2.7 million songs to AT&T wireless customers. Subscriptions will be $7.49/month for five (use-it-or-lose-it) tracks with "booster" packs available. The service will initially be available on four handsets - the Samsung a717 and a727, new versions of the Samsung Sync, and Nokia N75.

Complementing the music services launched under the Cingular brand in 4Q06, AT&T now adds the ability to access music OTA. Additionally, as opposed to the typical music subscription "rental" model once paid for and downloaded, the songs are yours to keep in the new service. OTA downloads will be in AAC++ format, and the PC downloads (at no additional cost) will be 192-Kbps MP3s. Customers can access previews for free and purchase booster packs (good for 60 days) for $7.49 for five additional songs.

This upgrade to AT&T's music offering will make it more competitive with its two primary rivals - Verizon and Sprint Nextel. Although priced at a $0.50/song premium over iTunes and Sprint Nextel's Music Store, AT&T's service brings the convenience, flexibility and appeal of DRM-free music. The service also has a search, discovery and recommendation engine. This new offering combined with its existing music offering and music ID service provides a comprehensive, if not complementary, value-add for wireless music lovers. For AT&T, the monthly subscription fee will offer a steady revenue flow. Moreover, because data charges are not included in the fee, data charges and/or data bundles will provide an additional revenue stream for the carrier.

We expect to see more traction toward the end of the year, as more of the 3G device portfolio begins to support this service. There is room for much more innovation on mobile music (see "Hype Cycle for Consumer Mobile Applications, 2007," "Hype Cycle for Global Consumer Communications Services, 2007," and "Dataquest Insight: The Outlook for the Global Mobile Music Market, 2005-2010").

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Google has sent a letter of intent to the FCC that it will participate in the upcoming 700MHz spectrum in the U.S. Google was required to commit to a minimum bid of $4.6 billion. The FCC has proposed 22MHz of spectrum marketed for an open network, which will enable any company to gain access to customers via wireless devices, effectively giving the Internet on a phone. Google's intent is to support this network via advertising either fully or partially. The company can also be a wholesaler of wireless services or form a consortium to bid on the spectrum and build out a network. Google faces an uphill battle, because 22MHz of spectrum is not enough to offer advanced wireless services like music and video as they are transported on the Internet to a large number of people, as well as additional services like voice and data to a large number of subscribers. Furthermore, advertising will be more selective with mobile phones, and, in many cases, voice will not be supported by advertising.

Using advertising for free or reduced-price services, supporting and building out the network, offering customer support, and offering possible handset subsidies will be a challenge and will eventually force Google to be more realistic about its expectations. However, if successful, this service has the potential to drive better usability and more value out of the mobile Internet than currently exists.

These Gartner notes give background to this issue:

"Google Extends Advertising Dominance With DoubleClick Deal"

"Google's Strengths Pose Threat to Carriers, Others"

"New Entrants Will Shake Up the Telecom Industry"

"Google Just Starting to Take Advantage of Its Channel Value"

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In a mature market like the mobile services market in Western Europe, it's always a worry that things will slow down and that there won't be much to keep the industry watchers alert. Penetration is over 100% in most countries; gone are the days when new users were pouring in. Voice services are still the cash cow for mobile operators, while data services have trouble generating real interest and substantial revenue.

However, one thing that keeps us watching is the consolidation activity or, in some ways, what could be seen as a game of musical chairs.

Last in line is France Telecom's (FT's) Orange, announcing it is partnering with equity fund Mid Europa Partners to acquire 100% of One GmbH in Austria. Until now, France Telecom had 17.45% of the third Austrian player (22% market share as of 1Q07). The ownership of One was very diverse, with other shareholders including Telenor (17.45%), TDC (15%) and E.On (50.1%).

For One, it's good news to see its structure rationalized. It may mean better drive and more commitment from the owner (because it's the only one in charge). It gains a strong brand and economies of scale from being part of a multinational operator such as Orange.

Telenor is in line with the strategy of gaining control of (or exiting) its existing minority interests. We have seen that Telenor has had a strong focus on growth markets, such as new ventures in Asia.

TDC, the Danish incumbent, divested Bite in Latvia and Lithuania to the Central and Eastern European private equity fund Mid Europa Partners in January 2007 and seems to be focusing on the Nordic market and the enterprise market, so a divestment of One is beneficial to its refocusing strategy.

For FT, it's an unexpected move, considering that Austria is a small market with a population of 8.1 million, a 115% mobile penetration rate, four competing operators and MVNO brands fighting for the market. That said, one advantage for France Telecom is the fact that One has been rolling out HSDPA upgrades throughout the country and is expecting the majority of the Austrian population to be UMTS and HSDPA users by the end of next year.

However, we question the logic behind entering such a competitive and mature market while at the same time discussing the exit from another mature and competitive market, such as the Netherlands, where Orange currently has a 12% market share, but where we've heard about a possible acquisition by Deutsche Telekom's T-Mobile. The only explanation that makes sense is that, under the current partnership with Mid Europa Partners, the transaction will not lead to any cash outlay for France Telecom and will not impact its net debt ratio targets. So, while selling Orange in the Netherlands will bring cash back to FT, the full ownership of One doesn't impact FT's bank balance.

In any case, this bit of consolidation is only one among others, and we still expect more to come on the mobile carrier scene in Europe.

For more information, see "Market Share: Mobile Connections, Western Europe, 1Q07" and "Forecast: Mobile Services, Western Europe, 2002-2011."

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U.S. cable operators Comcast, Time Warner Cable, Cox Communications and Advance/Newhouse Communications, together with their joint venture (JV) partner Sprint Nextel, have settled on a brand name for the converged services offering, according to an announcement at the CTIA convention in Orlando, Florida, this week. The Pivot service will integrate under one banner fixed cable-based VoIP service, mobile voice "powered by Sprint Nextel," and cable operators' broadband Internet and various digital cable TV services.

Two years in the making, the relationship among four top U.S. cablecos and mobile service operator Sprint Nextel is finally starting to bear fruit. The companies are linking into each other's wired and mobile networks to provide one-touch access to a host of service offerings for customers in eight metro areas throughout the U.S. The expectation is that Pivot-branded services will expand to 40 markets by the end of 2007 and eventually to all of the cablecos' service footprints. Early markets include Boston, Massachusetts; Portland, Oregon; San Diego, California; Phoenix, Arizona; Cincinnati and Dayton, Ohio; Austin, Texas; and Raleigh, North Carolina.

The service will have some unique attributes, including:
• Unlimited home and wireless phone calls to and from a home phone, without using any plan minutes
• Call forwarding without fees
• Access to cable programming such a news, weather and sports on the wireless handset, in addition to local TV listings of the respective cable operator programming lineup
• Access to e-mail and the Internet from a wireless handset
• Ability to send, receive and retrieve e-mail from the cableco's broadband Internet account from the handset
• Instant messaging
• Downloadable music and videos to the handset
• Linked voice mailboxes from home and wireless, with notification of incoming voice mails
• A single bill presentation for all services

The integrated service features are expected to be rolled out throughout the year in each of the respective cable operators' markets. Pricing and promotional rates will vary.

Cox Communications seems to have the most developed Web site for its service, which is presently being called "Mobile Access," and it has published rate plans that range from $29.99/month to $99.99/month for 2,000 minutes/month for individual users. Family plans range from $59.99 to $149.99/month for two phones and up to 3,000 minutes/month and unlimited mobile-to-mobile calling. The Mobile Access service includes unlimited "Mobile/Home Link" between the landline and mobile phone, unlimited Home Forwarding between the phones, and unlimited Mobile/Home voice mail.

Mobile handset choices for Cox, for instance, include the Motorola Razr V3m, the LG Fusic (LC-550), the Sanyo Katana (6600) and the Sanyo 2400. Cox is selling the phones and signing up customers for the various plans at five Cox store locations (at least) in the greater Phoenix area, online at its site, or by toll-free phone in Arizona. However, neither Comcast nor Time Warner Cable lists anything on its main Web site for the converged service. While Gartner has not perused all the city/regional sites for each cable operator, we are assuming similar offers for most locations with some variability in promotions and packaging.

This is cable's competitive shot across the bow of AT&T's "3-Screen" strategy for PC, TV and mobile phones, as well as its response to the increasing incursions Verizon's FiOS TV and Internet offerings are making in their respective territories. The Sprint-cable JV partnership tying the mobile phone offering closely with cable and broadband service in an effort to differentiate itself from the Verizon Wireless, AT&T-Cingular and other mobile voice service competitors in the market (see Cable Companies Join Sprint Nextel to Shape Mobile Future). FiOS has yet to link itself to Verizon Wireless in terms of "converged" services.

There is no word yet on how well the offering is being received in the various cable operator markets. It is still too early in terms of promotion of the service, so progress reports will follow.

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It's a federal election year in Australia. As the Liberal/National coalition government in Australia has become mired in scandal after scandal, the Labour party opposition is soaring in public opinion polls to its highest level of popularity in 20 years. And it keeps coming up with interesting new policy initiatives.

Broadband infrastructure is a joke in Australia (partly due to incumbent Telstra's iron-grip control of the last mile and partly due to government over-regulation). Australia currently is 17th on the OECD's broadband penetration list, which defines broadband as a snail's-pace 256 Kbps, rather than the more generally accepted minimum of 1.5 Mbps - at a time when several of our northern Asian neighbors are enjoying 100 Mbps or more using fiber to the premises (FTTP).

President Bush outlined a U.S. national broadband network as one of three priorities in 2002, and Gartner estimated at the time it would be worth over $200 billion to the U.S. economy annually - see "Is a National Broadband Policy More Frivolous Than Going to the Moon". South Korea began building a nationwide broadband network in 2004, which the Ministry of Information and Communications estimates will bring $225 billion in added economic benefits and 820,000 jobs over 10 years - see "Korean Ministry Links New Broadband Network to Economic Gain". In 2006, Singapore began planning a $5 billion national 1-Gbps FTTP network initiative, which it expects will help triple the island state's export revenue. There is evidence of a direct link between gross domestic product per capita and high penetration of broadband access - see "The Payoff of Ubiquitous Broadband Deployment".

Thus, yesterday's announcement from Labour of funding for an AUD$8 billion national fiber to the node (FTTN) network will no doubt create a lot of debate - not the least from the hundreds of independent ISPs that are forced to pay Telstra's last-mile unconditioned local loop "tax," as well as the dozens of regional ISPs that have just spent the last week in our national capital Canberra, protesting about the current government's fragmented approach to broadband infrastructure funding in regional areas. The new network will be a public-private partnership 50% funded by a future Labour government, and it will deliver 12 Mbps minimum to 98% of the population.

While the detail on Labour's proposal is so far a bit vague (see the press conference transcript), I for one am a bit of a socialist when it comes to important national infrastructure like this. If the economic benefits of ubiquitous broadband are only half what everyone says, then surely the national interest demands that the upgrading and control of the national broadband infrastructure should not be vested in one company alone.

Let me know what YOU think!

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BT has announced its BT Home IT Advisor service has 35,000 customers across the U.K. one year after launch, with more than 2,000 orders per week.

It's a good time for service providers like BT to offer home IT support services (see "MarketScope for Fixed Domestic Network Service Providers of Voice and Data, United Kingdom, 2007"). Broadband penetration has increased into the mass consumer market, where users will generally have limited IT knowledge. In addition, broadband is increasingly moving beyond connectivity and communication to become the backbone for the networked home and bundled services, including voice and entertainment. As the networked home emerges and new services are offered, there is more potential for things to go wrong and a likely rise in consumer demand for improved support and help with technical difficulties. A service like this helps users treat broadband and home networks like any other home appliance and service, like when users call someone to fix a boiler or washing machine.

Incumbent broadband providers like BT are well-placed to offer this sort of service. BT has a reputable national brand name, not to mention the insight into potential line problems from its own internal systems. In addition, it's likely that a significant number of consumers would make BT the first port of call for any problems that may (or may not) be connected to Internet, voice and PC connectivity. Home IT support offers BT a value-added service that positions the company beyond basic connectivity and should deliver small levels of incremental revenue. It could improve customer satisfaction levels and potentially help with customer loyalty and churn reduction.

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Nokia expanded its market offerings into the highly popular advertising market on 6 March 2007, launching two offerings around mobile advertising. The Nokia Ad Service targets the mobile operators and brings mobile ad publishers and a platform solution together to offer mobile advertising campaigns. The Nokia Advertising Connector is a platform intended to make sure advertisements are optimized for the end user's device and context (see www.adservice.nokia.com).

With more and more applications' business models based on mobile advertising, this move by Nokia is certainly going to continue the excitement in this area. As mobile advertising increasingly becomes important in mobile content plays, Nokia needs to at least get its feet wet in this area. It will, however, face stiff competition in the market, with very few key differentiation points outside its market positioning.

Working the value chain and ensuring all the players get what they are looking for from mobile advertising will certainly be a challenge, and it could well be that someone not directly involved could provide some facilitation into the process. Whether Nokia, new to the advertising market, can be that facilitator remains to be seen; however, I think it is a move in the right direction (see "Vendor Rating Update: Nokia"). As Nokia shifts its business into new areas such as the provision of music via the Loudeye acquisition or into navigation with gate5, the trend toward being more than a hardware player is clear.

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It seems the French market is too hot for some. DTAG has been reported to be looking to offload its ISP division, Club Internet. With three major competitors each having more than 2 million subscribers, a sub-million-level customer base no longer hits the mark. There is also speculation about a possible merger between Iliad, No. 2 broadband player in France through its ISP Free, and Noos-Numericable, the principal cable operator in France, controlled by investment fund Cinven. This makes more sense for Noos than for Iliad.

Noos was formed through a consolidation of multiple cable operations. This consolidation was the first step toward making cable a viable option in broadband and triple play. However, cable still needs significant investment to support bidirectional services and lags significantly in terms of broadband penetration and service developments.

An Iliad-Noos merger would enable the cable operator to develop a more comprehensive offering in the home and potentially benefit from Iliad's strategy and innovation along with its successful investments and reputation for superior customer service. However, it is less clear how Iliad will benefit, since it is already No. 2 in the market and could lose the characteristics that have made it successful through a merger with the less innovative Noos.

A few reasons why the merger could appeal to Iliad:

1. Iliad's founder and majority shareholder, Xavier Niel, decided to realize his investment at a high point.
2. This short-cuts Iliad's moves toward higher-bandwidth networks (€1 billion has been committed to roll out FTTH to 4 million homes, but this could expand dramatically on the back of Noos' existing core network).
3. Iliad gains scale and a more significant position within the media-buying landscape; to date, its offerings in TV are generally not unique among DSL providers. With its greater media-buying clout, Noos can deliver something other than access to a mix of free-to-air channels and packages from premium providers such as Canal+ and AB Sat.

France is one of the most competitive broadband and triple-play markets in Europe. The top two broadband providers, France Telecom and Iliad, have announced significant investment plans for FTTH in the hunt for faster speed to support incremental services. Further consolidation is inevitable as providers fight for consumer ownership and future revenue streams.

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At 3GSM in Barcelona, there were many companies offering various solutions for reducing call charges from the home - ranging from converged solutions such as UMA and VCC, to home base stations such as femtocells, as well as so-called home zones. Some operators with fixed and mobile operations have opted for dual-mode solutions, whereas mobile-only operators have targeted services at fixed-mobile substitution, especially location-based offers that include lower call charges when the user is in the home zone. These services have been offered for several years and are potentially an effective weapon against fixed-mobile converged solutions. Both types of solutions offer essentially the same thing - lower-priced call charges from the mobile handset when the user is at home.

However, most of the existing services are based on cell ID to determine the home zone location. This means that the geographic area that constitutes the cell can be very large, with a radius of two kilometers. While great for the user, this can lead to significant revenue leakage for many operators. The revenue that is derived from calls made from the home is affected; in addition, so is the revenue that comes from usage when the subscriber is in the vicinity close to home - such as at school, at a friend's or neighbor's house, on trips to the convenient store, and so on. There are no exact figures available for how much revenue could be leaking, but estimates are in the double-digit figures.

Seeker Wireless has come up with a way of reducing the size of the home location so that is spans some 50 to 500 meters. Contrary to the cell-ID-based solutions, Seeker's solution relies on the SIM, so that it is the device that recognizes when it's "at home." The solution is rather neat - not only does it reduce the revenue leakage, but also it could provide an opportunity to differentiate on pricing the various zones that a user may subscribe to, or a bundle. For the operator, a more granular location ability such as these could potentially pave the way for further services, such as location-based mobile advertising. We think that Seeker is addressing what should be a real concern to operators offering these services, as well as those who are considering these services. We will be tracking Seeker's progress.

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Carriers searching for ways to get closer to their customers should consider the benefits of new on-device software such as those demonstrated at 3GSM by SNAPin. The software provides several strands of functionality:

1. SelfService Care: Calls to the operator's customer care can be intercepted and a range of self-service options offered. For example, top-line billing data can be pulled down from the operator's systems to the device (for example, current balance and bundle left for period).
2. SelfService Configure: The operator can choose to pre-load a generic device at the point of sale with a range of branded/customized applications and media via templates stored on expanded memory SIM cards. This can then be updated OTA with new content suitable for the customer's particular segment.
3. SelfService Campaign: The software provides context-sensitive suggestions to the customer - for example, if customers have uploaded a certain number of contacts to their address books, they are offered the opportunity to utilize the operator's OTA address backup product.

Benefits to Carriers Serving Consumers
Aside from the cost-benefits associated with allowing consumers to self-care, this functionality offers the carriers some intriguing new customer experience and segmentation opportunities. For example, the carrier could offer an on-board experience targeted at the youth market for appropriate devices - this would then layer on other targeted promotions that it is are doing (new devices, advertising, POS experience).

Benefits to Carriers Serving Enterprise Customers
Enterprises would be able to work with their carriers to allow users to self-care - for example, refresh their corporate directories or reset passwords. In addition, enterprises with existing, sophisticated IT support functions would be able to act as first-line support, which would allow them to negotiate better terms with the carrier.

Potential Issues
These new offerings require business case justification as they require larger memories either on the SIM (Orange announced a 128Mb flash with SNAPin software pre-loaded at 3GSM) or in some cases on the device as well. Also, there are integration requirements (for example, data feeds are needed from various systems such as the billers), and careful marketing planning ensures the experience is consistent and updated regularly.

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AT&T announced that it will be using the MediaFLO network to offer broadcast TV, video clip, datacasting and audio services beginning in late 2007. AT&T has not announced any details about particular services, devices or launch dates. The company plans to use this service as a way to sell users on content access over multiple screens the - the TV, PC and mobile handset. AT&T can sell advertising to brands across a number of different channels. The MediaFLO service, as it is constructed now, is expected to offer 10 to 20 channels; downloadable video clips, which are pushed to the handset; and an audio channel. So the offering is not as robust as fixed-line TV services, but the video clip service should give the view more variety.

The deal is a strong win for Qualcomm, which will make its technology more relevant in the GSM/WCDMA market. The deal will require handset manufacturers that want to offer TV phones to Cingular to purchase Qualcomm MediaFLO chips or to purchase chips from a manufacturer that has licensed the Qualcomm MediaFLO technology. The deal is a blow for Modeo, the proposed DVB-H broadcast TV service, because the two largest carriers in the United States have chosen the MediaFLO solution.

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Virgin Media had its official launch in the U.K. on 8 February 2007. The launch follows the merger between cable operators NTL/Telewest with Virgin Mobile last year and is the culmination of the re-branding of NTL to Virgin.

The multiple-service provider model is taking shape in the U.K. This marks the definitive offer of "quad-play" services, offering digital TV, broadband, fixed voice and mobile voice. The pricing of the basic packages is nice and simple - £20 for two services, £30 for three service and £40 for four services. It also offers premium VIP services and will launch a TV-on-demand channel, Virgin Central, at the end of the month. (Read "Dataquest Insight: The Race Begins to Supply Multiple Services to U.K. Consumers").

The re-branding is an attempt to combat NTL's traditional poor service reputation with the might of the Virgin brand. Virgin Media clearly recognizes that customer service will be key to its success, and the first sentence of its press release states that it aims to offer "quality, value, innovative products and outstanding customer service." The press release also puts significant focus on customer service investments the company has made.

Virgin Media plans to aggressively attack Sky both in the marketplace and likely on the political and regulatory scene. But it will be hard-pressed to beat Sky's dominance and strategic positioning. This announcement does, however, push cable to the fore in the U.K. after many years as a second-rate competitor in both TV and broadband. In addition, the competitive impact on other broadband players in the highly competitive U.K. market could be severe, and this may herald the end for smaller players or those lacking a multiservice proposition.

Virgin Media also plans to address noncable areas to provide 97% population coverage in 2007. This is a difficult task to achieve in the time scale, given the economies of either using BT's wholesale service or rolling out LLU to uneconomical exchanges. It's also difficult to imagine the company would be able to deliver quality IPTV to reach 97% of the population.

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In a matter of two days, Vodafone announced two deals taking the operator closer to the Internet world:

• An exclusive partnership with MySpace to deliver a mobile experience to MySpace.com users, starting with the U.K. market
• A deal with eBay to offer access to the bidding site via mobile phones, originally in Italy

This follows an earlier announcement about Verizon delivering mobile access to YouTube, at the end of last year. We see these deals as a way of admitting that the "walled-garden approach" to the mobile Internet was not the best solution to attract usage and revenue.

However, Vodafone is not planning on letting go of the Vodafone live Portal. It simply wants to open the doors to the "real" Internet on top of the more structured portal. In the deals with MySpace and eBay, the applications will be embedded in the newer devices and available to download from Vodafone live for the devices already on the market.

Gartner has been advising mobile operators to look at the various Internet communities as a good breeding ground to develop their own mobile Internet user base, instead of trying to start their own closed communities from scratch. Hosting existing communities and more generally facilitating mobile access to what consumers are used to getting on their PCs are indeed logical offerings.

Also, Internet players are very keen on developing their mobile reach, with Google partnering with several networks further to the T-Mobile deal in mid-2005, then signing with Vodafone to provide the search engine on the Vodafone live portal and more recently taking part in the 3 X-Series, along with eBay, Skype and Windows Live Messenger.

In the case of MySpace, not only does Vodafone open its network to the outside world and a growing community, but also it takes part in the growing user-generated content phenomenon. This is all for the better as far as data traffic goes.

At present, details of the deal are sparse, so we have yet to see where both players will make money when usage starts to pick up. But overall, Gartner believes it is a step in the right direction for Vodafone to differentiate from its competitors and trigger higher data usage on mobile phones.

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On Wednesday, 31 January 2007, Vodafone Group provided an update on its key performance indicators for 4Q06, with total revenue up 5.1% and a proportionate customer base of 200 million by the end of January. With other operators yet to announce, it is difficult to make comparative assessments, but there are several interesting themes in the announcement.

Emerging markets: The potential and importance of emerging markets (see "Emerging Markets: How to Make Big Margins in Mobile Telecoms") is a key theme, hence the emphasis and associated speculation around India's Hutchison Essar, which Vodafone, among others, is bidding for. Growth in connections in markets such as Turkey, Romania, Egypt and South Africa was particularly high, although even here average revenue per unit (ARPU) declined.

Cost cutting: Various cost-cutting measures were brought to the fore. The completed disposal of Proximus in Portugal and Swisscom Mobile in Switzerland will have a sizable impact on cost over time. So, too, will other areas, such as network sharing with all the challenges that faces, as highlighted particularly in Spain and Australia. There was also the outsourcing of IT functions and consolidation to a single ERP system. And churn levels appear to be declining, which is a good improvement for the Group.

Service revenue: Although Vodafone announced that it had 13.6 million 3G devices among its base, this represents a fraction of the total 198.6 million subscribers it had at the end of 2006. The trend for ARPU is negative overall, even if there are encouraging trends from growing the live! customer base (Germany has also seen solid data revenue growth) and the uptake of converged offers such as Vodafone Zuhause reaching 2 million users in January 2007 and Vodafone Casa achieving 0.6 million. Voice revenue continues to slide, with data services now accounting for 18.9% of service revenue.

So what can we draw from this? The mature, established markets in Europe continue to experience pressure on net additions and ARPU, while initiatives like DSL bundling (see "Dataquest Insight: The Race Begins to Supply Multiple Services to U.K. Consumers") and fixed substitution must increase to have a significant effect. With ARPUs eroding, efficiency and cost control are needed to maintain profitability. The emerging markets, where growth is highest, will be of ever-increasing importance. It is with this in mind that Vodafone will bid over the future of Hutchison Essar.

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Verizon Wireless gave some additional details on its V Cast Mobile TV rollout, which should occur later in the first quarter of 2007. The various channels and entertainment brands that will be showing on Verizon's Mobile TV service are CBS, Comedy Central, Fox, MTV, NBC News, NBC Entertainment and Nickelodeon. The service will also include a programming guide. Verizon Wireless will be using the MediaFLO USA broadcasting network (www.mediaflo.com). MediaFLO is a wholly owned subsidiary of Qualcomm. The handsets being used will be the LG VX9400 and the Samsung SCH-U620

More details on pricing of the Mobile TV service, the pricing of the mobile phones and market availability will occur at launch. It is expected that the company will launch in 20 to 30 markets.

This is a start for Verizon in terms of mobile TV. The viewing quality will be good at 24 to 30 frames per second, and the Samsung phone has a QVGA display. However, the company faces some stiff challenges, including limited programming, limited market rollout and a limited number of handsets. The limited programming can be alleviated via a better video clip selection on its V Cast video service. The limited market rollout will limit market momentum; the limited number of handsets will slow initial growth. Gartner believes that, with a full nationwide rollout, with strong handset support, with good diversity of programming and with a good price per customer/advertising model in place, this service will be viable for Verizon Wireless.

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Yesterday, I was reading through the headlines on CNN.com and came across an interesting blurb in the technology section. It was about a man visiting in Germany who received a "ping" on his mobile from his video surveillance camera at his beach home in Brazil. When he checked the video remotely via his laptop, he saw a man had entered his home and was in the process of robbing it. He called his wife in Brazil (who was not in the home), and she called the police … a happy ending for the homeowners - the robber was arrested in the home while trying on the man's clothes.

At nearly the same time, I got an e-mail from a colleague that was looking for examples of new carrier revenue streams. With the application I had just read about fresh in my mind, I "Googled" video surveillance and a few other similar phrases and came up with a bunch of old press blurbs from 2003 about various remote monitoring offers that had apparently never done much.

I should explain that this particular application is a bit of a hot button for me, because my husband has been bugging me about what he could buy that would give him video surveillance for his veterinary clinic. He has had a couple of break-ins, and although the alarm went off, by the time the police arrived the robber was gone (and fingerprints really don't do anything except spread fingerprint dust all over everything!). So we had been looking at X-10 equipment as well as some higher-end stuff from the alarm companies. Cost is an issue, but the bigger issue is turning all the piece parts into an application that would actually work.

One hit I did get in my search was a write-up in Mobile Tech Today, about a service AT&T had launched on 26 October 2006; it includes live video surveillance on a computer or cell phone, as well as lighting controls and detection sensors for motion, temperature changes and flooding. The price points and the descriptions caught my attention. The video is actually stored by AT&T, and you don't need to have your computer on for it to work. It does have problems if there is a power failure, as it uses Homeplug networking components, but it has some interesting capabilities and the cost is reasonable at $9.95 per month plus $99 for the equipment starter kit (which probably won't be enough equipment).

This brings me to my point: Here is a good example of the "incremental" revenue that the combination of broadband, home networking and mobile can generate. With little effort, AT&T is able to capitalize on existing infrastructure investments to generate $10 or so more per month for a very basic need … personalized security. It's all self-install, so there's no expensive truck roll, and the user does the monitoring. Will this put the alarm companies out of business? Probably not, but right now my alarm company's video offer is about $2,400 and probably has more that we need. It will be interesting to see if AT&T can effectively capitalize on its brand and infrastructure in this area. The price points are low enough to be interesting, and when I checked out the demo and the "live chat" support, they were able to answer my questions. Undoubtedly, people will argue that this solution isn't robust enough, but the real question is whether it is "good enough" for some percentage of the market.

This service may not be the next big "killer app," but service providers have made some "real money" stacking up little applications in the past.

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No sooner had the International Telecommunication Union Telecom World 2006 trade fair shut its doors in Hong Kong this month than Dr. Hamadoun Toure, secretary-general-elect, stepped forward to announce his plans for the future. Toure, an eight-year veteran of the ITU's development organization, said that bridging the digital divide, security and emergency services will be his three top priorities, once he takes over from the retiring secretary-general, Yoshio Utsumi, in January.

These are all worthy aims for the U.N. organization. They are vague enough to be politically acceptable to everyone, but without any onerous commitment to change anything dramatically.

Indeed, the ITU Telecom event was characterized more by what didn't happen than by what actually transpired. China, the host country, failed to oblige the world's assembled telecom vendor community with a long-awaited announcement on its 3G licensing plans. Locally, the hot news was that Richard Li, chairman of PCCW, had failed to unload his 23% stake in Hong Kong's dominant telco, either to his preferred buyers or to a scratch investment consortium put together by his father, Li Ka Shing.

While the worthies of the telecom world attending the ITU forum all agreed that regulators everywhere needed to exercise a lighter touch, the host regulator, the Hong Kong Office of the Telecommunications Authority, had just tabled a proposal to issue additional 3G licenses for TD-SCDMA services, apparently abandoning its historical policy commitment to technology-neutral licensing.

Alongside all this, it was apparent that some of the real movers and shakers in the industry were not formally represented at the ITU event. Companies like Google, Nokia, Yahoo, Orange and Vodafone were conspicuous in their absence or low profiles. From a commercial view, this is understandable. A few years ago, at a previous ITU event, it was noted that so much money had been spent on the luxurious booths at the show that it could have alternatively financed a new telecom network for a moderately sized African nation.

Just a few weeks before the ITU event, Google CEO Eric Schmidt had stirred up the hornet's nest by suggesting (at a Web 2.0 conference in New York) that mobile phones should be free, or at least subsidized by advertising to the point that they cost consumers very little.

Funnily enough, Pekka Ala-Pietilδ, until last year president of Nokia, is planning to launch a new free mobile service in Europe in mid-2007 targeted at young people in Europe and paid for by advertising.

Virgin Mobile USA has put together an advertising-supported mobile service called SugarMama targeted at a similar youth segment. Meanwhile in Malaysia, Maxis has announced a loyalty scheme to reward its customers with free mobile minutes or free SMS for simply answering more incoming calls on their phones. While this doesn't yet constitute a revolution in the way the telecom industry does things, generational change is undoubtedly gnawing away at traditional business models. The telecom industry appears to be broadly aware of this trend, but it is understandably ill-disposed to cannibalize margins and revenue streams by materially changing the way it does things.

So progress really means different things to different people, although everyone pays lip service to it. Progress for some industry participants entails success in delaying the forces of change, while for others, it is speeding things up. Change, for better or worse, is inevitable - the trick is whether you use it to your advantage, or get run over by it.

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