[cnet] The U.K. government will not exempt universities, libraries, and small businesses providing open Wi-Fi services from its Digital Economy Bill copyright crackdown, according to official advice released earlier this week.
This would leave many organizations open to the same penalties for copyright infringement as individual subscribers, potentially including disconnection from the Internet, leading legal experts to say it will become impossible for small businesses and the like to offer Wi-Fi access.
Lilian Edwards, professor of Internet law at Sheffield University, told ZDNet UK on Thursday that the scenario described by the Department for Business, Innovation and Skills (BIS) in an explanatory document would effectively “outlaw open Wi-Fi for small businesses” and would leave libraries and universities in an uncertain position.
[cnet] Although iPhone and Android users download and spend time using about the same number of applications, iPhone users are more apt to buy one, according to a report released Thursday by AdMob.
Among mobile-device consumers surveyed by AdMob for its “January 2010 Metrics Report,” 50 percent of all iPhone users and 35 percent of iPod Touch owners purchase at least one app a month. Those numbers compare with 24 percent of Palm’s WebOS owners and 21 percent of Android users who buy at least one app each month. Results did not include Research In Motion’s BlackBerry.
iPod Touch owners seem to be the heaviest downloaders in general, grabbing an average of 12 apps per month, versus iPhone and Android users who download 9 apps a month. WebOS users overall download only around 6 apps per month, which may be due in large part to the scarcity of available apps.
Touch owners are also the heaviest users, spending an average of 100 minutes each month using their apps, compared with WebOS users at 87 minutes, Android users at 80 minutes, and iPhone users at 79 minutes.
Apple and Android owners seem to be the happiest with their devices, as 91 percent of iPhone users and 88 percent of iPod Touch owners would recommend their devices to other people. That compares with 84 percent of Android users and 69 percent of WebOS owners who would do the same.
For its report, AdMob compared the results of the current survey with those from a survey in July. Besides noting the rise in smartphones and devices like the iPod Touch, AdMob is seeing growing popularity in mobile Internet devices (MIDs). Ad requests from MIDs hit 17 percent in January, compared with 12 percent in July. Among users surveyed, 16 percent of iPhone users said they were interested in buying an iPad, versus 11 percent of WebOS users and only 6 percent of Android owners.
AdMob serves ads to mobile phones and monitors every ad request among more than 15,000 mobile Web sites for the iPhone, Android, and WebOS smartphones. The survey results were culled from 963 consumer responses captured over a two-week period earlier in February. Results did not include Research In Motion as AdMob does not currently serve ads to BlackBerry phones.
[this day] Two weeks ago, when the Bureau of Public Enterprises (BPE) announced the preferred bid made for Nigerian Telecommunications Limited (NITEL), my initial reaction was to ask: Why would anyone or company be willing to pay so much for the troubled telecoms operator? $2.5 billion was ridiculously astronomical. On what basis did this so-called winning consortium undertake its valuation of NITEL, I wondered.
But then again, those with an inking of the psychology of auctions, especially for telecoms assets and licences, would agree that often enough bidders throw all caution to the wind, discountenance the sound counsel of their advisers/consultants, and let their egos hold sway. This was glaringly evident during the European auctions held for 3G licences in 2000/2001 when telecoms companies borrowed heavily to pay for mere slips of paper to roll out third generation networks.
Several of those companies such as BT never recovered from those auctions and had to hive off its mobile and directory business units to survive. Others like NTT DoCoMo, Hutchison and KPN Mobile were forced to restructure their debt-ridden balance sheets by divesting from some of their overseas operations. The European experience was a crucial lesson in how not to rush headlong into acquisitions factored on futuristic hype as opposed to sound commercial and market considerations.
Aside from the $2.5 billion bid made for NITEL, the transaction even before its endorsement by the National Council on Privatisation (NCP) has been marred by denials from members of the consortia pre-qualified by the BPE. Several conflicting reports have been attributed to Unicom China, the Minerva Group of UAE, Telkom South Africa and Telecom New Zealand. Although the BPE and the technical committee of the NCP have tried desperately to defray the denials, the doubts that have been raised are impossible to dismiss.
So as the NCP prepares to meet and take a decision on its latest effort to privatise NITEL, it may be necessary to bring some questions desperately needing answers to the fore:
Bid Price
As already indicated, the $2.5 billion and $956 million bids submitted by New Generation Telecommunications and Omen International consortia respectively to emerge the preferred and reserve bidders during the financial opening round cannot be justified. Although the federal government has committed to assuming the liabilities of NITEL, its EBITDA (earnings before interest, tax, depreciation and ammortisation) was estimated at $13 million. A bid, wrote a foreign based analyst, of $2.5 billion for 75 per cent of NITEL would be equivalent to more than 100 times its current EBITDA.
A professional investor uses EBITDA to approximate the fundamental earning power of the company’s operations while separately factoring in the projected capital expenditure needed to maintain those operations. This is necessary because of the time value of money principle. Failing to do so ignores a very important company fundamental.
Even if we were to sidetrack NITEL’s balance sheet, history has shown that the NCP should be circumspect about accepting unrealistic bids for NITEL. In 2006, I wrote in this same column that the $750 million offered by Transnational Corporation for NITEL was too high. This was based on rapidly changing market fundamentals and the fact that its non-core assets comprising pricey real estate assets that might have attracted the $750 million price tag, had been hived off.
By this time, NITEL’s market share had already been eroded by the competition and its mobile subscriber base was down to less that 250,000 from a peak of 1 million it had the year before. In the end, Transcorp was only able to pay $500 million under a leveraged buyout but could not raise additional capital to inject into the operator.
Prior to Transcorp, the first attempt to sell NITEL in 2001 also went belly up. A $1.317 billion bid was submitted by Investors International (London) Limited that it could not pay. At the time, NITEL was offered along with its impressive portfolio of real estate assets. It was also still competitive, as new entrants like MTN and Econet had only just been licensed and were still struggling to roll out networks nationwide.
However, that was nine years ago. Today, NITEL’s subscribers (mobile and fixed lines) are down to a few thousand and boasts less than 1 per cent market share; ARPUs (average revenue per user) of stronger competitors are dropping which is indicative of high operating costs and the economic downturn; it no longer owns the non-core assets which once made it seemingly humongous; and, the only assets of significance it has to offer is its transmission capacity comprising the SAT 3 submarine cable and the fibre optic transmission backbone covering southern Nigeria. It may also be cheaper to pay for a fresh licence (if NCC has any to spare) and roll out a network from scratch than take on NITEL with all its problems and complexities.
But let us presuppose that I am too hasty in my assessment of the preferred and reserve bids made for NITEL. If by some stroke of good fortune the Minerva Group, which is the lead member of New Generation consortium is able to meet the payment criteria as and when due, how certain is the BPE/NCP that it has the capacity to inject fresh capital into NITEL. (New Generation claims it will inject an additional $2.5 billion into NITEL to upgrade and roll out a network, bringing its total investment to $5 billion.)
The last thing the BPE needs is another Transcorp on its hands. It should note also that one of the reasons the Kharafi Group of Kuwait is eager to dispose of its Zain Africa operations is because its diverse business has been hit by the global financial crisis and is saddled with a huge debt overhang. Several Dubai-based companies are in the same dire straits as the Kharafi Group.
Bid Rules and Processes
A review of the Request for Proposal which was sent out to investors shows that the BPE altered or waived its own rules mid-stream without making it public. Section 3.1.2 of the RFP in my possession stipulates: ” No entity (including for this purpose its shareholders, subsidiaries or associated companies) may be a member of more than one consortium.”
That being the case, on what basis was the New Generation and Omen consortia pre-qualified to proceed to the financial bid stage of the transaction? BPE and NCP have publicly announced that Unicom China is a member of both consortia. Were they not conversant with their own rules? BGL, the financial adviser to New Generation, has tried to dismiss the circumvention of the RFP on the grounds that BPE extended the submission deadline for expressions of interest and was able to harvest more bidders to participate in the bid.
BGL is right. But when the BPE extended the deadline for the submission of EOIs to enable more bidders participate, it made this public. On the same note, if BPE was going to waive or set aside its prequalification criteria, should it not, at the very least, have informed all the bidders involved in the process so they would have had equal opportunity to realign and strengthen their consortia?
The same RFP also allowed bidders to submit proposals for a 75 per cent stake in the NITEL Group or a 75 per cent stake in one or more of its units, namely: SAT 3, NITEL Landline, MTel, Fibre Optic Transmission Backbone and NITEL CDMA Network System. Whoever thought up this privatisation strategy was plainly stupid. If BPE was advised by its advisors, then they should be sacked and the money paid for their services recovered.
First, it is impossible to offer NITEL and/or each of its subsidiaries simultaneously as one transaction. The BPE should have taken a decision to either sell the entire group, or the subsidiaries as independent legal entities. The strategy should have been to adopt one or the other, and not both transactions simultaneously. In the event, the BPE elected to balkanise NITEL and sell its units separately, the entity should have been unbundled and each of the units corperatised. Other than MTel, no other unit of NITEL operates as a corporatised limited liability company. Neither were the assets and liabilities of NITEL assigned to the new companies and valuations undertaken for them to establish their reserve prices.
So on what basis was the RFP developed to offer bidders the option of bidding for the NITEL Group or its subsidiaries on the same platform? Even when assets and liabilities are assigned, it is inevitable that the shell company is going to be left with stranded assets. Who was going to assume those? Where all these issues factored into the data room documents that were made available to bidders?
These posers bring to surface another critical issue: Realistically, can NITEL, MTel and the other subsidiaries be physically separated? The way a significant portion of the NITEL network, comprising its landline switches, transmission backbone and mobile network, was built is such that the infrastructure is co-located in the same premises, and is therefore interdependent.
Even though there’s been talk among other network operators in Nigeria of co-locating their infrastructure as a way of cutting costs, no telecoms company has adopted co-location as a network roll out option. This is because cut throat competition and the grab for market share remains very fierce in a country with only 50 per cent penetration. Besides, in this era of broadband data services, the fate of NITEL’s landline business is linked to its transmission backbone, so why would anyone sell or want to acquire a landline subsidiary independently of SAT 3 and the optical fibre transmission backbone?
Who Can Vouch for the Chinese?
Despite BPE and NCP’s best efforts to paper over the denials that followed the financial bid round, they cannot conceal the fact that the move by foreign firms to distance themselves from the transaction has created an air of uncertainty. Unicom’s back and forth statements with respect to their membership of the winning consortium have been the most difficult to fathom.
Based on information made available by sources with a tab on the transaction, Unicom’s European unit has committed to be the technical partner to New Generation and Omen International. In the same breath, the same European unit has committed to taking up a 20 per cent stake in the New Generation consortium should the consortium succeed during the financial bid process. It is uncertain if the commitment shall be met during the payment stage of NITEL’s acquisition or at some future date.
If it is assumed, however, that it decides to take up to half of the 20 per cent of $2.5 billion, Unicom Europe would therefore have to cough up $250 million, and possibly more if it elects to defer the subscription of its shares. $250 million, at the minimum, is not chicken change. The question is can a wholly owned European unit make this kind of commitment without the knowledge and approval of its parent company in Hong Kong? Or was the letter written just to satisfy BPE’s preference for bids whose members are committed financially to the transaction?
The NCP, when it meets, certainly has its work cut out. But if you asked me, the NITEL transaction, once again, is set for failure.
[phone+] As the FCC prepares to release its national broadband plan recommendations to Congress, it turns out there are some Americans who don’t even want high-speed Internet. About 93 million don’t have the option at all, and many of those citizens see the Web as a waste of time and money, according to a new FCC survey.
Whether that’s a silly perception is for you to decide. Yet, as the Obama Administration pushes for ubiquitous broadband coverage with stimulus money and a pending strategy, the reality is, the FCC is finally getting to the bottom of some providers’ fears – if we build it, will they come? And the answer is not necessarily yes.
Sure, some of the respondents said they haven’t signed up for broadband because they think dial-up is sufficient. Or they don’t know how to use a computer, harbor privacy and security concerns, don’t like long-term contracts or can’t afford broadband. But that’s no salve for the operators spending millions, or billions, of dollars to build networks in high-cost areas – even if they expand their business models to target vertical markets, not just residential or commercial accounts. In fact, such information probably adds to their concerns since they still have to recoup their investments. And it’s not a one-time proposition.
“There’s an ongoing problem of operations to consider,” Dean Cubley, CEO of ERF Wireless, said last week. “It may turn out to be a nice network, but if there’s no cash flow to justify its upkeep,” what then?
That’s when companies have to “continue to manage costs and look for new revenue streams, which is why we push broadband as hard as we do,” said Mike Rhoda, senior vice president of governmental affairs at Windstream Corp. (WIN).
ERF, for its part, does some of that already. It runs private networks for banks and the oil and gas industry, for example. And Windstream leases computers and the related equipment to customers who can’t afford the up-front expense.
Nonetheless, the adoption question, as highlighted in the FCC’s report, remains, putting the onus on the Obama Administration to educate Americans about the benefits of broadband. That’s something the FCC is expected to tackle in its forthcoming proposal. Another way the agency likely will address the 93-million-people gap is to press carriers to lower their prices. Again, though, the investment vs. return issue comes into play. Operators don’t want their margins to suffer. So, they say, the government needs to overhaul the Universal Service Fund to support broadband, rather than legacy voice, buildouts, something the FCC is expected to champion in the pending report.
[smh] THE government will sell its stake in the national broadband network within five years of it being completed, under draft legislation released by the government.
The draft bill sets in law some of the key government pledges surrounding the $43 billion broadband network, but leaves some questions unanswered about the operations of NBN Co, the company set up to build the network.
The Senate will today prepare to debate legislation to split Telstra, with talk the government is considering amendments to give the Australian Competition and Consumer Commission greater say in structural separation, in an effort to woo crossbench senators.
The draft broadband bill makes it mandatory that, in the establishment phase, the government maintains a majority stake in NBN Co. But once the network is formally declared complete, it requires the government to sell its stake within five years. If the timeline to build the network is met, NBN Co will be privatised by 2023.
The legislation also declares the network as wholesale only, meaning it will sell access to retail telecommunications companies.
This has prompted concerns from some because it gives the Communications Minister discretion to relax the wholesale-only rule. Explanatory notes with the legislation say this is needed to allow flexibility to offer services to end-users such as government agencies.
The head of the Competitive Carriers Coalition, David Forman, said the government needed to define what was meant by wholesale services.
Investors did not appear too concerned with the bill and are instead focused on the legislation to split Telstra. ”It was as expected,” one analyst said of the broadband legislation. Telstra’s shares yesterday fell 4¢ to $2.96, equalling their record low in March last year.
The draft legislation does not clarify how much of NBN Co can be owned by any single entity during the period of majority government ownership or afterwards.
It says only that an ”unacceptable private ownership or control situation” is prohibited, with the term to be defined in regulations that are yet to be released.
The bill will be introduced before July.
[euractiv] Leading associations in the field of information and communication technologies (ICT) have teamed up to measure the sector’s energy consumption and coordinate action on deploying technologies that contribute to the EU’s climate and energy goals.
A new industry initiative, the ICT for Energy Efficiency (ICT4EE) Forum, was launched yesterday (23 February).
The initiative is supported by DigitalEurope, the Global e-Sustainability Initiative (GeSI), TechAmerica Europe and the Japan Business Council in Europe.
It responded to the EU executive’s recommendations in October 2009 (EurActiv 12/10/09), which urged the sector to commit to ambitious targets to bring its rising carbon emissions under control.
The companies said they would work over the next three years to develop ways of measuring the energy consumption of ICT processes and agree on a voluntary framework for reporting on energy footprints. They will also identify targets to improve the energy efficiency of their processes with a view to exceeding the EU’s 2020 climate targets by 2015.
The forum will also seek cross-sectoral cooperation with the construction, transport, and energy supply industries as well as consumers to provide intelligent solutions to saving energy.
[peace FM] Telecommunications giant, Vodafone, has emerged as the world’s most valuable telecommunications brand, according to a global ranking of the world’s most valuable brands by compiled by BrandFinance Global 500.
The same brand ranking places Vodafone as the most valuable brand in the UK, a statement from Vodafone said on Saturday, quoting a report by Brand Finance Global 500.
The report said out of the 500 global top brands, Vodafone currently ranks seventh, beating other top brands such as HSBC (8th), Toyota (10th), MacDonald’s (17th), Apple (19th) and Nokia (20th).
Vodafone was the eighth most valuable brand in the world in the 2009 rankings of the Brand Finance Global 500 report, but the brand’s image and value shot up to seventh this year.
The value of the world’s leading telecommunications brand, Vodafone, is at $29 billion US dollars.
Vodafone paced past major brands in the UK league, with the firm among 27 British companies listed in this year’s survey of the world’s 500 most valuable brands by Brand Finance.
Vodafone entered the telecommunications market in Ghana about 11 months ago, and is already making a great impact with its subscriber base, according to the company.
The company said its ultimate goal is to become the number one telecommunications operator in Ghana providing a one-stop telecommunications solution to its clients and subscribers.
According to the Head of Corporate Communications of Vodafone Ghana, Mr Ike Cudjoe, the global ranking of the Vodafone brand is a clear indication of the pedigree of the company and what the brand offers to its clients, customers, partners and shareholders.
Mr Cudjoe said the posture of Vodafone was to excite the Ghanaian market with great telecommunication innovations and solutions, “because mobile and fixed line subscribers in Ghana deserve the best and this must happen”.
The methodology employed in the BrandFinance Global 500 uses a discounted cash flow (DCF) technique to discount estimated future royalties, at an appropriate discount rate, to arrive at a net present value (NPV) of the trademark and associated intellectual property: the brand value.
[next] There must be a sense of déjà vu among watchers of Nigeria’s privatisation programme with the unfolding drama surrounding the sale of Nigerian Telecommunications Limited, better known by its acronym NITEL.
Last week, the Bureau of Public Enterprises proudly announced the choice of a preferred bidder for the utility months after the last core investor -Transcorp – was forced to give up a large part of its holdings in the company. In 2007, the Federal Government revoked the sale of NITEL to Transcorp because the company had “failed to achieve the objectives of the privatisation guideline”.
The sale of the company to Transcorp itself came after several false starts, but the ongoing controversy over who actually won the 2010 bid is likely to complicate government’s efforts to unload the company on private investors.
Hardly had the last drop of celebratory wine been drained from ecstatic mouths last week Wednesday than Unicom, a Chinese company advertised as a member of the winning team, denied having any part in the consortium’s bid. An official of the company, speaking from Hong Kong, said neither the Beijing-based company nor its parent company, participated in the bid.
Things were going to get even messier. Telecom New Zealand International, listed as technical partners for another bidder, Brymedia West Africa Limited, which emerged third with an offer of $551million, also said they were never involved in the bidding process.
New Generation Consortium, which won the bid, decided to put a brave face on the debacle. It attributed Unicom’s reaction to a case of mistaken identity between China Unicom (Hong Kong) Limited and China Unicom (Europe) Operations Limited, which it claimed was actually providing technical and managerial support for the consortium.
But even the European arm of Unicom denied any knowledge of its participation. China Unicom has, however, backtracked a bit by saying it was ready to work with New Generation to run Nitel.
But the denials and hedging tend to support allegations that due diligence and transparency were not the most important qualities considered by those in charge of the bid process.
The failure of Nigeria’s privatisation programme could best be captured in the travails of the national utility, which was, at some time in the not too distant past, one of the key agencies of government.
In 2001, during the first attempt at privatising NITEL, Investors International London Limited (IILL) emerged the preferred bidder with an offer of $1.317 billion for 51 per cent equity in the company. This ended in disaster after the firm failed to meet the payment commitment for the bid and it, along with its financial backers, First Bank of Nigeria, lost their deposit.
In 2003, government tried a different tactic using a strategic investor sale through a management contract with another European firm, Pentascope; that also failed. Yet a third attempt, which saw Orascom of Egypt emerging the front bidder, with a $256.53million offer, did not succeed as the bid was deemed below the reserve price for a 51 per cent stake in the company.
There is no disputing the fact that Nigerians – aside from some harassed government officials, unpaid staff and former employees of the company- are hardly bothered about what happens to Nitel anymore. More nimble telephone operators have taken over the industry offering a suite of services that the former national champion would struggle to match.
But the company still matters because it is still a drain on the national purse and its staff of over 10000 cannot be left floundering. In addition, the company still runs the national telecommunications gateway – the Sat 3 – which remains a monopoly until cable projects of private companies such as Glo, come on stream.
So, it is imperative that a genuine core investor be found for Nitel.
Professionalism and decency demand nothing less.
[post zambia] Taxes attracted by the telecommunications equipment and services have continued to be the main hindrance in infrastructure development, Zain Zambia managing director David Holliday has disclosed.
Appearing before the parliamentary committee on communications, transport, works and supply yesterday, Holliday said the high taxes on equipment had stagnated the telecommunications sector, particularly in rural areas.
“The taxes attracted by the telecommunications equipment and services remain a major hindrance in the deployment of costly infrastructure particularly for rural areas and certain economically depressed areas,” he said.
Holliday told the committee that the telecommunications sector has been negatively impacted through the absence of short and long term tax incentives.
“The telecoms sector is negatively impacted between 31 per cent and 35 per cent in total being taxes on revenue as contribution to the state treasury,” he said.
Holliday suggested that taxes charged on renewable energy tools such as solar equipment which is vital for sector development in rural areas should be removed for a considerable time.
He also noted that the lack of an integrated licensing regime had increased the cost of telecommunication service expansion.
Holliday said rural areas in the country had great potential which remained unexploited.
“The potential for rural connectivity which spurs infrastructure development is vast and remains unexploited in Zambia. Our shortcomings in fully meeting these targeted areas for telephony universality need a quick rethought beyond projects and programmes on rural connectivity,” said Holliday.
[light reading] FTTH Conference 2010 — Amongst the cheer created by the some 2,500 people here, fiber access service provider hopefuls wander around the genuinely buzzing show floor checking out the wares of the 100-or-so exhibitors.
But the reality is that FTTH (fiber-to-the-home) just hasn’t taken off in Europe in the way people had expected. At the end of 2009 there were just 3.46 million FTTH/FTTB (fiber-to-the-building) users in the whole of Europe, and 900,000 of those were in one country, Russia, according to the latest figures from the FTTH Council Europe , collated by Idate .
(Helpfully, and rightly, the Council doesn’t include fiber-to-the-curb in its statistics, as the final connection to the customer is over copper.)
Other than Russia, the only other country with more than 500,000 FTTH/B users is Sweden, with 537,100, giving it an FTTH/B penetration level of 12.2 percent. Lithuania has the highest penetration figure, with nearly 17.7 percent (it had nearly 240,000 FTTH/B users at the end of last year).
By contrast, in Asia/Pacific there were 38 million FTTH/B users at the end of 2009, and 7.6 million in North America.
The slow pace of progress in Europe is frustrating many, and has forced Heavy Reading chief analyst Graham Finnie to revise his outlook for European FTTH uptake by the end of 2013 to 11.3 million from his previous 14 million. (See FTTH Fever Hits Europe.)
Even the normally tub-thumping Council is admitting that things could be better. The Council’s director general, Hartwig Tauber, admitted today that Europe “is lagging… we have a long way to go.”
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