News From Telecom World

Archive for June 2009

The implementation of a direct operator top-up strategy can bring double digit revenue gains and reduced costs, claims a study commissioned by electronic payments vendor, Vesta Corp. Given the size of the prepaid market in Western Europe, this can equate to hundreds of millions of Euros annually, adds the report. Direct operator top-up channels include all operator-managed top-up channels that rely on electronic transactions outside a retail environment, such as the operator’s website, IVR and handset applications.

The research indicates the significant advantages that direct operator prepaid top-up has over other existing top-up methods, including improved performance metrics, lower costs and improved CRM capabilities. In addition, direct handset top-up has the ability to remove the fragmentation and complexity impacting the take up of m-payment services and drive new revenue streams for operators.

The research has been conducted by independent telecom consultancy Northstream and is based on the feedback of wireless operators across Western Europe.

Chris Parsons, CMO of Vesta commented, “When prepaid direct top-up is executed properly it not only offers an opportunity to increase the ARPU of prepaid but also provides the foundation for operators to seamlessly offer a wide range of profitable mobile payment services from the same platform. Aside from prepaid debit reload, other services such as peer-to-peer transfer, international remittance and mobile commerce become far more readily accessible.”

According to the whitepaper, with overall growth in the prepaid market slowing, operators are looking at ways to reduce costs while increasing prepaid customer loyalty and revenues. Non-cash (credit/ debit card/ bank) payment penetration has grown significantly in Europe, and a staggering 91% of operators interviewed intend to drive top-up transactions from costly commission-based retail infrastructures to “virtual” non-cash top-up (NCTU) channels.

Aligned with this view, not only are operators exploring alternatives to retail top-up but 100% of those interviewed want to shift their non-cash payment mechanisms from a bank centric model to a direct operator model. Given this finding, it is somewhat surprising that less than 20% of the NCTU offerings analyzed in the research included handset-based top-up applications, even though top-up frequency using handset applications can be up to 80% higher than other channels. This increased frequency also results in an ARPU increase of 23%.

The main imperatives stated for adopting a direct top-up approach were avoiding zero credit service interruptions, increasing top-up frequency and improving customer experience with anytime, anywhere top-up availability via handsets, the web and IVR. However, the research also indicated the ability of direct top-up to enhance CRM capabilities, enabling operators to identify high value customers and cross-sell while customizing and optimizing user experience. Indeed, over 90% of operators interviewed highlighted the need to strengthen the way that top-up integrates with their online services and other operator-controlled channels.

Chris Parsons continued, “By adopting a direct top-up approach, operators will improve their prepaid performance indicators by reducing costs, improving prepaid customer loyalty and increasing revenues. Operators are struggling to build-out direct top-up channels given the reduction in their IT budgets but those that address these challenges early will reap significant benefits in the prepaid market and create a strong platform from which to launch further mobile financial services.”

Source: cellular news


Adobe Flash may still be excluded from the iPhone, but the software company is determined to provide a unifying standard for the rest of the smartphone world, and will launch its key handset product by year-end.

The company currently offers Flash Lite for phones, but Apple and others have complained that this is insufficiently powerful for the high-end mobile web experience.

Adobe has since formed the Open Screen Project to support its Flash and AIR technologies as key systems that could bridge PCs and handsets, and is now set to release actual products.

CTO Kevin Lynch, in an interview with The Wall Street Journal, said that Adobe has made deals with chip designers and phonemakers and is offering incentives to developers to write programs the new version of the software.

Adobe will launch a trial version of Flash that works with most of the key smartphone OSs – including Palm WebOS, Google Android, Symbian and Windows Mobile – this year, though iPhone and BlackBerry remain off the roadmap for now.

“We need to have Apple’s agreement before we can do it,” Lynch said.

As promised for the past year, the new release will bring fully featured PC Flash to smartphones and Flash Lite will be phased out. Nokia is a key ally, and joined with Adobe in February to create a $10 million fund for developers who build mobile apps for Flash.


The two epic cellular battles that have dominated headlines for months continue.

In the first instance, France Telecom says it won’t make a bigger offer to buy Osracom’s stake in ECMS, Egypt’s largest mobile operator, the Financial Times reports.

France Telecom and Orascom have been squabbling over the French operator’s attempts own ECMS (and its 21 million subscribers) outright since 2007 – they assumed joint ownership in 2001 – amid many claims and counter-claims of failure meet agreed or arbitrated conditions.

The two companies control ECMS via Mobinil, a company that owns 51% of the Egyptian mobile operator. France Telecom owns 71.25% of Mobinil and Orascom the rest. Orascom also owns 20% of ECMS directly.

In March, an arbitration court, sponsored by the International Chamber of Commerce, ruled that Orascom should sell its stake to France Telecom for €517 million ($725 million).

But, as the FT explains, the Egyptian securities regulator has in effect blocked the transaction by saying it take place in tandem with a tender offer to minority shareholders at ECMS, which is listed on the Cairo stock exchange.

Egypt’s Capital Market Authority has rejected two offers by France Telecom to the minority shareholders on the grounds they were too low. The most recent offer was worth €1.5 billion ($2.1 billion).

France Telecom has repeated its previous stance that it is ready for as long a legal battle as necessary to secure its rights (and control of ECMS) and continues to accuse the Egyptian authorities of overriding international law and consequently damaging future investments into Egypt.

In the second epic struggle, Russian bailiffs have agreed to hold off on the sale of Telenor’s shares in VimpleCom until the court in the West Siberian city of Tyumen has reached a decision, according to Dow Jones Newswires.

Reuters reports that the court has adjourned the case until 30 September.

Telenor yesterday said any deal with Alfa Group to resolve the dispute over jointly-owned mobile ventures in Russia and Ukraine must wait until the Russian court case brought by Farimex is solved.

Telenor maintains that Farimex is an off-the-shelf, British Virgin Islands company with less than a 1% stake in Alpha, that is being used by Alfa Group for unfounded gain. Alfa Group is owned by an oligarchy of Russian billionaires.

Telenor and Alfa have joint ownership of VimpelCom and also Kyivstar in Ukraine. Farimex is suing Telenor for delaying the progress of Kyivstar in Ukraine.

In this complex, protracted case, the bailiffs had frozen the shares as collateral against the $1.7 billion damages the court awarded against Telenor by the Siberian court in favor of Farimex.

Under the country’s law, the bailiffs could have sold the shares before Telenor had the chance to appeal.

Telenor has prevailed on the Russian Prime Minister, Dmitry Medvedev, to see that justice is done and the principles of international law upheld in the interests of encouraging investors into Russia.


Research released today by mobile device management company Mformation highlights that the mobile phone is becoming increasingly central to consumer lifestyles. A significant amount of information is now stored on mobile devices. 94% of users surveyed store telephone numbers while 65% also store address and other contact information on their phones; 83% have digital photos, 51% have videos, 48% have calendar information and 40% have music downloads. With ever-increasing phone and network capabilities, this trend of using the phone to store valuable and sensitive data from every aspect of life is set to continue.

One consequence of using the phone as a method for creating and storing data and information is that people must now worry about this material if the phone is lost or stolen — 82% of people fear that if their phones were lost or stolen, someone would use the information stored on them for fraudulent means. 90% of those questioned are worried about the loss of their personal data if a mobile device were to go missing, with 72% admitting that the personal information stored on their devices would be difficult to replace. In addition, 40% of respondents even said that losing a mobile would be worse than losing their wallet.

“Mobile phones are becoming more and more essential to user lifestyles,” commented Matt Bancroft, Vice President, Mformation. “People can access the Internet and store significant amounts of valuable personal information and other content on their mobile devices. With new advances in mobile technology arriving every day, this trend will only increase the role of the mobile device in peoples’ lives by providing us with increasing freedom to store, manage, send, and receive information. Mobile operators need to make sure that users are confident that their devices are secure, the data on those devices is protected, and device content can be backed up and recovered if a phone is lost or stolen. Such a high level of dependency on mobile phones today means that operators need capabilities to help minimize risk and maximize trust,” continued Bancroft.

Because mobile phones are being used for such a wide range of activities, when a device is lost, it can prove to be devastating for the user. 91% of people questioned in the UK and US said they would be “devastated” if they lost their mobile phones. For this reason, it is unacceptable that three-quarters of the people interviewed said that it would take a day or more to get a new phone fully up and running with all their personal data after a loss or theft. In fact, 61% of people said that this should take 2 hours or less.

“Operators need to step up to the mark to make sure that their customers are getting the service they expect in terms of security, data recovery and phone setup,” said Bancroft. “As people continue to increase their reliance on mobile phones for everyday actions, operators have to make sure that they are ready to support this increased commitment by the user. More extensive use of the device is great, but the mobile operators need to underpin this activity by offering capabilities to protect and manage users’ data if things go wrong.”

The research was undertaken by independent research house Coleman Parkes, which asked 4,000 people in the UK and US about problems related to mobile usage.

Source: Total Telecom

This year could well be make or break for small-cap telecommunications companies, many of which are vulnerable as larger rivals step into their traditional areas of trade in an attempt to increase market share in uncertain economic times, analysts say.

Amid the gloom, however, some companies have shown a resilience to the downturn by growing market share through regional business and providing a series of niche services.

These companies have managed to create partnership arrangements with “tier one” blue-chip peers – big companies which typically own a physical infrastructure or network – carving out areas of resistance where other smaller companies may be struggling.

Tier one companies are now starting to move back into servicing the small and medium enterprise (SME) market through a process called “aggregated outsourcing.” This involves going to smaller telco companies and asking them to badge themselves as either BT Group PLC or Cable & Wireless, for example, to undertake SME work, with the tier one company taking a cut of the profits while outsourcing the work.

“BT won’t be the only blue chip eyeing the SME market, Cable & Wireless is also another contender after it cut its customer base from 30,000 to about 3,000 SMEs back in 2006,” said Andrew Darley, a telecommunications analyst at institutional broker and corporate adviser FinnCap.

One company which has shown resilience in the current market is AT Communications Group PLC. The company specializes in maintenance, and designing and installing Internet protocol technology which allows for communication of data across a packet-switched internetworks alongside standard telco operations.

“We’re seeing a reverse in the current trend, with more business from tier one companies,” said Chief Operating Officer Scott Kean.”If you look at Cable & Wireless, for instance, they’re clearly moving out of that [SME] space, and passing it on to suppliers like us.”

“C&W handed SME contracts over to us on condition that we don’t shift them onto another carrier. They still keep the revenue, albeit they reduce their margin,” he said.

“By doing this, tier one companies can shave off staff costs through structured redundancy,” Kean said.

“AT Comms has done well in a credit crunch, as people defer spending on hardware,” said Philip Carse, a telecommunications analyst at Teleq Consulting.

“By being lower down on the scale in terms of the sort of customer they are catering for, much of their business comes from the maintenance type, support contracts, areas which will show resilience as customers defer spending on new technology,” Carse said.

Kean said, however, smaller telco dealers and resellers will start to lose more ground to the tier one companies if they don’t secure partnership deals.

“Dealers and resellers are, and will continue to suffer for the moment. We’ll probably see more small companies looking to sell their business on or consolidate, getting out before their revenues are further reduced.”

Analysts also cautioned that, while AT Comms will benefit from aggregated outsourcing, it is still likely to suffer from recent cuts by blue chips in contractors and staff.”BT cut its contractor costs by 30% this year and you’d expect AT Comms to have a rather hard time because BT is their major client,” Darley said.

Analysts also said mid-size telecommunications firms could stand to benefit in the current market after a series of profit warnings in recent months from the likes of Alternative Networks PLC, Maintel Holdings PLC, and KCOM Group PLC, a Hull based telecommunications and internet provider, pushed such companies into significant restructuring.

“With these companies cutting so many costs, plotting how their positioning will look when the market recovers becomes difficult. But, if you look at KCOM, it’s a highly cash-generative business with a flexibility you may not get from a tier one,” said FinnCap’s Darley.

KCOM’s Chief Financial Officer Paul Simpson said that a company like KCOM will always have the advantage of bespoke products and services, something that larger peers can’t always offer “The larger you are, the more difficult it is to bespoke a product every time somebody rings you, but our size gives us a flexibility that you may not find with the larger players,” Simpson said.

It would be futile for a company like KCOM to buy up smaller networks to try and compete with tier one companies, he said.”We are a long way behind BT and C&W in terms of the size of our network; in this respect we’re much better off utilizing other people’s networks in combination with our own to drive our offering.”

The restructuring of the company’s operations has revolved around getting its Integration and Managed Services unit back to profitability. The company always had a very cash-generative business on one side of the fence and that “there would be no point in buying a smaller network unless it gave extra reach, and was underpinned by cost savings,” Simpson said.

Redstone PLC, a smaller communications services provider, is a unique investment case. The company operates very closely within the limit of its banking covenants and could stand to benefit from consolidation more than other smaller players.

The company migrated up the value chain to focus on much larger contracts to facilitate growth. While it has a strong sales pipeline, it faces cash flow problems as clients delay on contracts, according to FinnCap’s Darley.

Of the smaller telcos, Redstone is trapped in a financial straightjacket where it can’t generate sufficient cash to consider making significant acquisitions, Carse said.

This, therefore, pushes it toward one of two possible outcomes: either forge further partnerships with tier one players or look at the benefits of consolidation.

Carse said a merger or acquisition was still conceivable with Redstone, the shares of which have lost 85% of their value in the past 12 months, although it was more likely to be initiated by a tier one player who possessed “greater financial fire power.”

“The risks in the interim are significant, as are the rewards in the long run. However, there is no incentive to own the stock until those rewards are closer,” Darley said.

When asked Redstone didn’t wish to provide comment.

Analysts also cautioned about the dangers of “catching a falling knife.””If we’ve hit the bottom of the macro trend, then consolidation holds fewer perception risks,” said Darley, referring to the benefits of consolidation in an environment which would typically limit organic growth.

While the current market is still very uncertain, analysts are confident that there are benefits awaiting some smaller companies.”Apocalypse phase one, is passing,” said Darley.

“Direct company action on the balance sheets through initial and far-reaching cost-saving measures has resulted in more partnership deals and bespoke services, which has allowed them to reinforce their areas of business,” he said.

“There’s a proliferation of smaller telco companies which serve the SME market better than a tier one company can offer…investors should still be braced for volatility but understand that there are some highly cash-generative businesses on in this market trading at very much knocked-down prices,” Carse said.

Source: Total Telecom

Quality of Service on IPTV networks, for both operators and their customers worldwide, can now be greatly improved thanks to the efforts of a dedicated team of experts at the Broadband Forum.

The approval and release of “Splitter Testing” Technical Report 127 (TR-127) creates – for the first time – the opportunity for network operators and independent test labs to carry out a system level test across four key IPTV network elements; the DSLAM, the CPE modem, the Central Office Splitter and the CPE Splitter. Testing splitters as part of a complete system assures the new TR-127 compliant splitters will prevent disturbance of the video signal by a telephone signal on the same line.

“Video signal interruption by on-hook, off-hook telephone usage has plagued Triple Play delivery since the concept first became reality,” explained Broadband Forum Chief Operating Officer Robin Mersh. “I’m absolutely delighted that after such a thorough effort by our Testing and Interoperability Working Group we are able to help the industry and its customers deal with this issue.”

The new TR-127 enables high quality delivery of triple play services by maximizing the interoperability of splitters and in-line filters with xDSL transceivers in an active, dynamic telephony environment, including the previously troublesome on-hook, off-hook, ringing, and ring trip events. TR-127 addresses VDSL2 technology as well as ADSL2/2plus, and relates to the previously issued Technical Report 100 (TR-100), which covered ADSL2/ADSL2plus Performance Test Plans.

The Broadband Forum sees TR-127 being used as a new reference criterion for the specifications of splitter equipment and testing worldwide. Among the drivers for this series of dynamic splitter tests were:
• Telephone ringing and answering (Ring trip) events had been proven to have an adverse effect on the quality of IPTV services.
• VDSL2 and ADSL2plus needed separate dynamic test procedures
• There was a need to analyze how splitters might affect the xDSL performance, in terms of achievable bitrate and margin

TR-127 addresses these issues with dynamic splitter test procedures. Splitters compliant with these requirements will offer significant reduction of IPTV pixelization on the TV screen image and will eliminate the “re-starting” of the DSL Modem. The result is that service providers and customers will soon be able to request TR-127 tested splitters, which deliver better picture quality and a more robust service.

TR-127 was announced by Robin Mersh, COO of the Broadband Forum, at this week’s FTTx Summit where the Broadband Forum was host organization.

Source: Total Telecom


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