J P Morgan Cazenoze is advising Telefonica on disposal options for O2 Airwave, the TETRA network that provides secure radio services to the UK’s emergency authorities.

Telefonica has said that it has appointed J P Morgan Cazenove to look at all the options available for the total or partial disposal of the business.
The announcement confirmed press reports  leaking the news that Telefonica was considering a sale.
Airwave is the TETRA based network that O2 operates on behalf of Police, Ambulance, Fire and other public safety organisations.
One of the largest PFI projects in the country, the network now supports 200,000 users, but O2’s owner Telefonica has decided that its priorities now lie elsewhere.
In 2000 O2 Airwave signed a 19-year, £2.9 billion contract with the Government to operate the network.
The review process will follow intial consultation with the Government, and will take months, a statement from the operator said.
Telefonica is carrying large debts following the acquisition of O2, and a sale of the profitable Airwave, which is backed up by solid goverment contracts, could form part of a plan to reduce that debt burden.

With a growing awareness of the operational benefits and efficiency savings of real-time data monitoring, wireless telemetry (or AMR – Automated Meter Reading) will lead the evolving growth in M2M markets over the coming three years and beyond, according to industry analysts Juniper Research. Juniper claimed that revenues are set to rise from $11.6 billion in 2006 to $25.3 billion by 2009.

The substantial rise in revenues — expected to quadruple by 2011 to $40.8 billion — will contrast with limited growth in telematics from $6.4 billion to $11 billion in the same period — owing to current widespread usage in many commercial vehicles due to legislation, says Juniper. Other outlets, including security and surveillance, highway and public transport signs, and health care will show encouraging signs rising from a cumulative low of $2 billion in 2006 to over $9 billion by 2009.
Dr Therese Cory, report author, believes the figures represent great potential for real-time electronic data to transform enterprise performance and efficiency.
“The utility industry is a prime example of how, by networking and remotely monitoring machines, data can be analysed and collective behaviour understood in new ways.
“For example a real-time unified view of how power is used will help safeguard this increasingly rare resource. And what can be measured can be controlled, and ultimately optimised.”
To date, however, growth has been restrained. M2M projects are notoriously long-term investments taking years to initiate, due to large budgets, the length of the decision making process, and time needed to put together a custom solution from several supply chain players.
Despite these hurdles, Cory insists the signs are positive.
“Earlier in 2006 the Italian energy company Enel completed an installation of 30 million AMRs. The cumulative cost of this project up to 2005 was $4.48 billion. In the same year, only six million meters were providing readings, increasing revenues by $1 billion.
“Certainly, making the business case will become easier as more companies bite the bullet and provide success stories for others to learn from.”

Tellabs has said that its fourth quarter 2006 revenues were US$455 million, right at the bottom end of predictions it made prior to the announcement.

That represents a quarter on quarter reduction from the $523 million earnt in the third quarter 2006, as well as a 13% year on year reduction from revenues of $521 million in 4Q 2005.
Tellabs also said, in its preliminary estimate, that GAAP EPS for the quarter would be in the 5-7 cent range, and its results showed 7 cent earnings. Third quarter GAAP earnings were 13 cents, and 20 cents per share in the fourth quarter 2005.
The company said that “preliminary estimates were driven by lower than expected revenue from some large North American customers, an unfavorable shift in product mix, revenue deferrals related to a new product launch, and a lower effective tax rate.”
“Uncertainty surrounding telecom industry consolidation led to lower than expected revenue in North America during the fourth quarter,” said Krish A. Prabhu, Tellabs president and ceo. He also forecast improvements in 2007.

First read this opening paragraph from a Visto press release issued recently:
“Visto awarded permanent injunction and damages in patent case against SEVEN Networks. Court fines SEVEN with double damages and attorney fees for the willful infringement of Visto’s patents.

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The U.S. District Court for the Eastern District of Texas has issued its final judgment awarding Visto Corporation double damages (a total of $7.7M) plus costs and attorneys’ fees for SEVEN Networks’ willful infringement of Visto’s patented intellectual property. The opinion follows a ruling from the jury on April 28, 2006 that SEVEN willfully infringed on the system that Visto created over a decade ago. The judge also granted a permanent injunction against SEVEN Networks, which will be stayed pending appeal.”
Then read Seven’s own interpretation of events:
“Court Dismisses Visto Claim and Stays Injunction
The United States District Court for the Eastern District of Texas entered final judgment and dismissed one of the five patent claims asserted against Seven. The Court also stayed Visto’s request for an immediate injunction on the remaining four claims pending appeal. SEVEN and its customers can continue to use and sell all of SEVEN’s products as before. No new developments are expected in this case until early 2008 when the appeals process is due to complete.”

So, spin aside, this is what seems to have happened. In April this year, a jury found that Seven had infringed on five claims relating to three Visto patents and awarded Visto $3.6 million damages. Seven appealed, and yesterday the result of that appeal was that a judge doubled the damages and awarded costs against Seven. He also issued a permanent injunction against Seven using products incorporating the technology.
At the same time, one of the claims Visto had made was rejected by the judge, and the judge also stayed his injunction on Seven pending a further appeal.
Back in April, Seven said it was working on a work-around in the event of any injunction, meaning its customers would be unaffected. Visto ceo Brian Bogosian told Mobile Europe that the patents are so crucial as work around would be unlikely.
Seven is hanging on to that stay of execution by its fingernails, stating that its customers, “can continue to use and sell all of SEVEN’s products as before. No new developments are expected in this case until early 2008 when the appeals process is due to complete.”
The company said that despite these serial reverses it expects things to go its way eventually. It also has a counter-claim filed against Visto which is due to come to court in June 2007.
Meanwhile Visto, which has seen four of its five claims upheld, doubled damages and costs awarded, and an injunction granted, is understandably cock-a-hoop.
“Justice has been served. Today’s decision heralds a victory for true innovation and for lawful invention, whether it is conceived by a large corporation or by a passionate few toiling in the dim lights of a garage,” said Brian Bogosian, Visto’s Chairman, President and CEO. “SEVEN’s unlawful misappropriation of Visto’s technology has been uncovered for what it is: a flagrant violation of our property rights. We hope that all responsible entities will respect the decision of the Court.”

Gartner analysis claims more than half of global tier-one telecom carriers trying to establish new lines of business will fail through 2010

According to new analysis from Gartner, mobile broadband, Internet Protocol (IP) technology and the desire to become full-service providers are increasingly driving telecom carrier strategies.  However, says Gartner, as they confront these industry upheavals, carriers face risks in building non-core telecom business units and over-investing in immature technologies. The reality for most telecom carriers is a future where they have to strive to be profitable on much lower margins than today, it says.

Historically, carriers have been able to depend on high revenue growth from broadband or mobile services, but they now face the prospect of rapidly declining revenue growth.  Gartner predicts that year-on-year growth of total revenue from telecom services (80 percent of total global telecom market size) will shrink to just 1.7 percent in 2010.  Gartner says it expects total telecom service revenues to rise only modestly over the next four years from $1.3 trillion in 2006 to $1.5 trillion in 2010.

Consequently, Gartner said that over the next few years more carriers will invest in new markets, such as media or IT, to compensate for revenue losses in traditional telecom services like public switched telephone network voice. 

As examples of this practice, Gartner cites recent development in the the market, which include Telecom Italia’s recent transformation into a media company, and signing agreements with Fox, MGM and Sony, while pushing for content distribution to increase the demand for higher fixed-broadband connections; the partnership between BT Global Services and HP for integrated IT services, which is seen as a step towards hosting BT’s application and managed services business; and SK Telecoms entrance into the content creation market.  It has acquired Korea’s largest music recording label, YBM Seoul Records.

However, Gartner has warned that more than half of these new approaches will fail because many carriers have a limited knowledge of their existing subscriber base and often don’t understand the new business models.
 
“The synergies between the different business models and markets are very limited,” said Martin Gutberlet, research vice president at Gartner.  “This type of diversification carries a high risk of losing focus on today’s core business priorities such as customer retention and cost cutting, with no guarantee of increased revenue growth in the long-term.”  Mr Gutberlet said that due to the high risk of failure, Gartner is advising carriers to carefully define risk mitigation and potential exit strategies.  “It will take more than just hiring a few media or IT executives for carriers to succeed in these new markets,” he concluded.

Gutberlet referenced a few examples of companies that have experienced challenges venturing into non-core areas. ESPN, the American sports cable channel owned by Disney, abandoned its mobile service after less than a year due to disappointing subscriber uptake. E-Plus in Germany had to face up to failure three years after launching the content portal iMode. Mr Gutberlet noted that it will be interesting to follow whether O2 will able to launch iMode more successfully.

Nick Jones, vice president and analyst at Gartner, said that while profit margins are waning in Western Europe, there is still profitability for carriers in their existing client base if they are prepared to work for it. “These are certainly tough times for carriers, but the answer isn’t necessarily to invest huge sums of money in new business models,” he said.  Instead Mr Jones recommended that carriers look for opportunities with existing customers as a less risky way of securing future revenues.  “Carriers should consider how they might improve on the services that they already provide in order to exploit their existing client base better.”

Jones outlined two potential scenarios for carriers who opt to develop opportunities within their existing customer base.  “The first option is to improve network access activity and become a pure connectivity provider.  Carriers looking to safeguard their (albeit slimmer) profits could do a great deal worse than becoming a really excellent bit-pipe.  There will be steady returns for those who focus on reducing costs and increasing efficiency,” he said.  Alternatively, Mr Jones said that carriers could choose to embrace Internet-based services and become an aggregator, concentrating on facilitating access to Internet content rather than creating it. 

Those carriers who do decide to diversify into new markets are likely to acquire companies to form new lines of business and Gartner predicts more partnerships between carriers and media or IT service firms.  “The engagement of carriers in media and IT services will lead to more competition and, therefore, we expect increased price pressures, particularly in the consumer segment,” said Mr Jones.  He advised carriers to separate network access and new non-telecom service units into individual companies so that they can be closed or sold and to create partnerships for non-telecom services to share the risk. 

As far as the enterprise is concerned, Gartner warned that carriers will offer more complex bundles, which will make service selection and contract negotiation more difficult. It advised enterprise buyers to evaluate carefully the value of commercial bundles to avoid buying extra services that are not needed.

The analysis forms part of the report Predicts 2007: Carriers Will Spend Billions to Try and Survive the IP Revolution and is one of Gartner’s key predictions for the telecoms industry in 2007 and beyond.

Speaking at CES 2007 in Las Vegas – which begins today – Nokia President and CEO, Olli-Pekka Kallasvuo, will share the company’s vision of how simplifying and converging mobility and the Internet with connected multimedia devices is making it possible to create, consume and share our experiences when and where we want.

“Mobility will be at the core of how the Internet evolves, where people can have access to the people, content and information they want from wherever they are,” said Kallasvuo. “In emerging markets, we see that more people are accessing the Internet for the first time via their mobile device rather than on a PC and we aim to be at the forefront of making that happen.

“Single purpose devices are becoming less attractive,” continued Mr. Kallasvuo. “And the converged devices taking their place are increasingly powerful and easy to use.” Reaching 90 million units in 2006 and expected to reach 250 million units in 2008, the market for converged devices is the fastest growing segment of consumer electronics. In this market, Nokia is the world’s largest manufacturer, selling close to 40 million converged devices in 2006.
 
“Nokia brings the value added of mobility and connectivity to convergence – enabling people to take their content and Internet services with them,” said Mr. Kallasvuo. He also shared his excitement regarding Nokia’s cooperation with Sprint Nextel in bringing WiMaX and open internet based services and mobile devices to the pockets of US consumers in 2008.

Nokia will also announce a deal with blogging specialist Six Apart, to bring Vox, a free personal blogging service to the Nokia Nseries multimedia computer product range. The two companies will make it easy for people to upload video and photos, and update their blogs directly from their compatible Nokia Nseries devices to the Vox blogging service.

Nokia will also present a collaboration with Skype to develop a new mobile Skype experience on the Nokia N800 Internet Tablet.
 
According to Nokia, the collaboration builds on the familiarity and richness of desktop Skype and makes it mobile. The Nokia N800’s small size and easy wireless connectivity frees Skype users from their desktop, allowing Skype conversations to take place anywhere, as long as there is an available wireless Internet connection.
 
A number of product launches will also be announced at CES:

• The Nokia 6131 NFC handset includes Near Field Communications (NFC) technology to enable information sharing, service initiation and payment and ticketing capability with one tap of the device. Used in much the same way as existing contactless cards and keytags to allow access and make small payments, the addition of NFC technology to a full featured mobile device is said to add an entirely new level of capability by leveraging the phone’s computing power, wireless Internet access and user interface.

• The introduction of a trimmer fold model to its Nokia Nseries line up, the Nokia N76, a new multimedia computer.

• The introduction of its next generation widescreen Nokia Nseries multimedia computer, the Nokia N800 Internet Tablet, which is said to combine a personal Internet experience with easy wireless connections, high resolution display and support for a wide variety of Internet applications.

• The introduction of the Nokia N93i, a compact digital camcorder and multimedia computer in one.

Blames “consolidation uncertainty”

Tellabs has said that its fourth quarter2006 revenue is expected to range from US$455 million to US$470 million. That represents a quarter on quarter reduction from the $523 million earnt in the third quarter 2006, as well as a year on year reduction from revenues of $521 million in 4Q 2005.

It also said, in a preliminary estimate, that GAAP EPS for the quarter would be in the 5-7 cent range. Third quarter GAAP earnings were 13 cents, and 20 cents per share in the fourth quarter 2005.

The company said that “preliminary estimates were driven by lower than expected revenue from some large North American customers, an unfavorable shift in product mix, revenue deferrals related to a new product launch, and a lower effective tax rate.”

“Uncertainty surrounding telecom industry consolidation led
to lower than expected revenue in North America during the fourth quarter,” said Krish A. Prabhu, Tellabs president and chief executive officer. “We expect the revenue impact to be temporary since, as 2007 begins, our customers continue to see growing user demand for bandwidth. Tellabs remains well-positioned to benefit from this.”

Signs high street retail partner for Nokia, Samsung, Motorola phones

BT has announced a range of Wi-Fi handsets which, it says, will use the company’s growing network of hotspots and Wireless Cities to offer customers thousands of extra sites to use its Fusion service.

The operator is putting the phones into high street retailer Phones4U, which has 400 UK stores. The company’s plan is to build 12 Wireless Cities (meaning widespread WiFi coverage in city centres) by March 2008. BT says that the Nokia 6136, Motorola A910 and the Samsung P200, all dual mode phones, will boost sales and drive demand for its fixed mobile convergence product. And if the promise of VoIP calls from WiFi hotspots is not enough, the carrier is throwing in free internet access.

Steve Andrews, BT chief, Mobility and Convergence, said: “Today, Fusion takes another huge step forward with an exciting new evolution offering even more places to get great value mobile calls. These latest free handsets will allow customers the freedom to just make the calls and surf the web via BT broadband without having to think twice.”

Set to buy Casabyte

Test and measurement company JDSU has said it intends to buy mobile service quality monitoring specialist Casabyte. Casabyte will be integrated with JDSU’s Communications Test and Measurement division, which is strong in residential broadband testing.

Casabyte’s service quality monitoring solutions are aimed at ensuring quality of service and reducing operating expenses and  customer churn as mobile network operators deploy next generation networks and content-rich data and video services.

Patrick Kelly, founder and analyst at OSS Observer, said,  “Casabyte’s solutions should help JDSU provide a broader offering of products to support customers deploying fixed-mobile networks and services. Casabyte’s product set is very complementary with JDSU’s NetComplete service assurance product portfolio.”

“The convergence of fixed-mobile networks and services requires communications test solutions for any service at any point in the network – from the head end to the handset,” said John Peeler, president of JDSU’s Communications Test and Measurement division.  “With the addition of Casabyte’s product portfolio, JDSU offers the industry’s broadest set of service assurance solutions for the deployment of ‘quad-play’ broadband services for consumers and businesses.”

“In a fiercely competitive market, the simple expansion of services alone will not enable service and content providers to meet their business objectives,” said John Read, president of Casabyte. “Quality of service is a key success factor, and we will continue to help our customers achieve their QoS goals as a part of the JDSU family.”