Posts by Thomas Husson from December 2005

Thomas Husson | December 21, 2005, 04:57 AM
3G reality

According to a new survey by GSA – the Global mobile Suppliers Association, the total number of 3G/UMTS networks passed the 100 mark (in 42 countries). The pace of 3G commercialisation is fuelled by WCDMA. The number of WCDMA networks which have entered commercial service in 2005 is 40, which is over 80% of all 3G networks launched.

Oh Surprise ! Japan and Korea lead the way. For a more precise view on Asian markets, here is an insteresting article from Wireless Asia(thanks Lourdes for catching this one and good luck for your new Taiwanese life!).

JupiterResearch estimates Western Europe at the end of June 2005 had 12 million 3G phone owners, which represents less than four percent of the total European mobile population.
Worldwide, the number of WCDMA subscribers reached 30 million in June 2005 (and as many as 34.8 million by the end of September 2005, according to the Global mobile Suppliers Association). If other 3G norms such as CDMA 2000 1x EVDO are included, the number of subscribers has already passed the 50 million mark. As a result, Western Europe represents roughly 40 percent of the WCDMA market, and 20 percent of the worldwide 3G market.

By way of comparison, Japan—often described as the most advanced mobile market—has 33 million 3G phone owners, a significant 37 percent of its mobile population. However, NTT DoCoMo introduced its 3G FOMA service in Japan back in 2001. Accordingly, it will take some time before critical mass is reached in Europe.

Due to its aggressive entrant strategy (aided by heavy phone subsidies and attractive voice tariffs), 3—the brand name of Hutchison Whampoa—reported 4.5 million subscribers in Italy and 3.2 million subscribers in the UK in June 2005, two years after its initial launch.

At that time, 3 alone represented 66 percent of the European 3G market. With Vodafone, the two companies have an 80 percent market share!
The pace of migration to 3G is accelerating, and recent numbers published by Vodafone (with more than one million customers in Germany) tend to prove the uptake is starting. Most operators will benefit from the end-of-the-year period (as the seasonal effect leads to roughly 35 percent to 40 percent of total sales being made in the final two months of the year), and some of them are even claiming this will be a "3G Christmas."

More interestingly, several operators have released figures on their average revenue per user (ARPU). For example, Vodafone live!'s ARPU is 24 percent greater for a 3G customer than it is for a 2.5G customer. Now the question is to how large will the inevitable dilution effect be as 3G penetration moves beyond the early-adopter market.

Thomas Husson | December 19, 2005, 05:11 AM
Are you sunbathing ? No I am just watching a movie...

Two years ago, I remember watching a futuristic TV ad.

A couple was sitting alone in the desert. Both the man and the woman started to wear sunglasses and a couple of seconds later they were watching a movie on a virtual screen in the middle of nowhere.

Sounds like this dream turns out to be true. You can now buy mobile video glasses with Orange France. The goggles are only available with the Samsung D600E for 299 euros. More about our future here.

View image

Thomas Husson | December 09, 2005, 10:52 AM
EA invests $680M in mobile gaming

This is one of the most important deal in the mobile content space so far. Electronic Arts (EA), the world's leading interactive entertainment software company, is ready to pay 680M$ to acquire the main US mobile pure player JAMDAT.

To give an idea of the deal, JAMDAT reported $54.6M at the end of Q3 2005 and in fiscal 2005, EA posted revenues of $3.1 billion. If mobile gaming revenues increase steadily, they will still represent a small part of total games industry revenues for the next five years (see Joseph Laszlo's comment here).

EA formerly launched its mobile operation earlier this year and intended to launch 25 new mobile games in 2006. With this acquisition, it will increase to 50.

So the main reason for the deal is that it will go much quicker to buy expertise, know-how and global relationships with carriers than to build the business from scratch. There are other reasons to explain the consolidation trend in the mobile gaming industry (see also InfoSpace (Elkware, Iomo), and Sorrent (Macrospace) recently renamed as Glu or even Real Networks acquiring Mr Goodliving) as highlighted in our latest European mobile game survey (client, click here for more details)

Still. $680M is a huge amount of money. JAMDAT had already spent $127M to acquire TETRIS rights. To recoup the investment, it means selling more than 1M copies of the game during 2.5 years (= 1Million*31 months* $4/game)...Obviously, the investment is strategic and means more than that since TETRIS is already among the TOP selling games at least in most European countries: enhancing the company's relationships with carriers. By the way, TETRIS already represents more than 20% of JAMDAT total revenues...The company will have to diversify and to launch new games particularly in Europe, where Bejeweled and Mahjong have not been that successful. International revenues represented only 15% of JAMDAT revenues last quarter. No doubt FIFA Sports, SIMS 2 and NEED FOR SPEED will help...

Thomas Husson | December 07, 2005, 08:28 AM
MVNOs latest news

Italy's telecom regulator Agcom will not make compulsory the introduction of Mobile Virtual Network Operators, as had been
requested by BT Albacom, Tele2, Fastweb, Eutelia and Tiscali.

The regulator considered that none of the competitors had a dominant position. If the entry of 3 Italy increased competition, such an issue remains questionable.

The ECTA (European Competitive Telecoms Association) has just released its 3rd annual survey on European regulatory bodies called "RegulatoryScorecard". Interestingly, Italy is not among the best students...

France ranks in the third position (after UK and Denmark): telcos have been fined for collusion and MVNOs are starting their activities. Tele2 announced 100.000 customers and M6 130.000 subscribers. Adding all MVNOs together (Debitel, Breizh Mobile, NRJ...), the total MVNOs subscribers should pass the 500K mark by the end of the year. It remains a nascent market, roughly over 1% of the French mobile population...

As mentionned in a recent post, ALDI (a German hard-discount retailer) has just launched a MVNO in Germany. No doubt such a low-cost strategy will dynamise the competitive front in Germany with a tariff around 0.15 euros / minute.

However, I think there is more to expect from ISP, cable companies and other alternative fixed operators. The recent announcement of NTL buying Virgin Mobile (the most succesful MVNO to date) is a clear indication that more multiplay offers will emerge. However, it does not necessarily means "Quadruple play" (see Ian Fogg's blog here). As reported by Enguerand Renault from Les Echos, Liberty Global (a US cable company having a pan-European presence) has announced agreements with mobile operators (One in Austria and Orange in the Netherlands). Many players will indeed be tempted to offer a mix of Internet, TV, fixed telephony and now mobile. However, multiplay could also mean new innovative services depending on each player's strategy and regulatory constraints as highlighted by France Telecom's new offer : "my personal services".

Thomas Husson | December 03, 2005, 02:26 AM
534M euros fine for Orange, SFR and Bouygues Telecom

The three French mobile operators - Orange, SFR and Bouygues Telecom -have been fined €534m for collusion between 1997 and 2003.

France's competition commission (the "Conseil de la Concurrence") ruled that they had acted against the best interests of consumers and the economy by sharing confidential information and agreeing on market shares.

Orange has been fined €256m, SFR €220m and Bouygues Telecom €58m. The latter was fined even though the company claims it suffered from the duopole Orange/SFR (currently 83% market share), which is partly true in my opinion in the sense that it did not benefit from the same advantages than other third entrants in Europe.

This is the first time a fine for collusion reaches such an amount.
The operators are likely to appeal the decisions and could benefit from the fact that there have been leaks in the press before the official announcement. Even though class actions do not really exist in France, carriers could also face further legal action from consumers. UFC Que choisir, an association defending consumers, estimates the damage up to 1.2 billion euros !!

This is really bad news for the French operators, because of the record amount of the fine (up to 3% of the turnover for Orange and SFR) and essentially because of the bad press resulting from this decision and the damage it will do to the operators' credibility.

At least, this will be a good news for MVNOs. A very very nascent market in France (more than 100.000 subscribers for Tele 2 and around 130.000 for M6, the most successful players so far)...

So back to my post from the other day:

- if you kept your phone bills between 2000 and 2002 (I feel sorry for you if you had a prepay card...) and if you are very patient, cartelmobile.org (I love the name!) will help you to try to get your money back

- the stocks prices increased between 1.1% for Bouygues and up to 2.7% for Vivendi Universal. The reason: financial analysts had already anticipated the fine and expected even a higher amount due to leaks in the press.

- telcos still need lobbyists...Bouygues Telecom is asking Bruxelles to look at the roaming market. It is taking action against the Freemove alliance ! It is probably true the third player does not have much of the lucrative roaming market : Orange benefits from the calls of Telefonica, T-mobile and Tim (its parnters in the alliance) whereas SFR benefits from that of parent company Vodafone.