Smartphone segment continues to be routed, say analysts

New smartphone sales continue to suffer, according to the latest industry report by CCS Insight.

According to the global technology research firm, sales will be limited to 1.8 billion units in 2019, a drop of 3% as compared to the sales in 2018. The decline in sales reflects various challenges which include lengthening replacement cycles for cell phones, weakening of the Chinese economy and also political uncertainties in other important markets.

Even in India, CCS Insight has projected new smartphone sales to go over 320 million units in 2019, an increase of just 5% as compared to 2018. The online retail disturbance that occurred in February could be one of the reasons; and a general cautious mood that probably keeps people away from buying a new phone before the 2019 general elections, could be another reason for this moderate increase in cell phone sales. As compared to other markets, it is expected that the sales in India will be soon bouncing back.

The latest results from IDC Worldwide Smartphone Qview has found weakening channel demand, which has resulted in a 6.2% year over year drop in global smartphone ODM/EMS assembly shipment volumes in Q4 2018 with total shipments of 356.7 million. Senior research manager with IDC's Worldwide Smartphone ODM Research Group, Sean Kao said: “Longer duration of smartphone usage has led to slow demand in the hot season, causing global smartphone production to drop in Q4 2018.”

For Q1 2019, component suppliers might get no orders as several assembly plants are having huge inventories in hand. The IDC is expecting that assembly volumes of smartphone ODM/EMS might slowly recover after being moderate in the first quarter.

Interested in hearing industry leaders discuss subjects like this? Attend the co-located IoT Tech Expo, Blockchain Expo, AI & Big Data Expo, and Cyber Security & Cloud Expo World Series with upcoming events in Silicon Valley, London, and Amsterdam.

TDC hoovers up Danish spectrum in latest auction

The Danish Energy Agency has completed its latest spectrum auction, with TDC running away with the majority of the available assets.

Of the 20 blocks in the 700, 900 and 2300 MHz frequency bands, TDC won 14, the maximum available to the telco at this auction. 3 Denmark acquired two 10 MHz blocks in each of the 700 and 900 MHz bands, while TT Network, Telia and Telenor’s joint venture, two 5 MHz in the 700 MHz and two 10 MHz in the 900 MHz band.

“Several frequency blocks provide higher speed, longer range and stronger indoor coverage, which gives us a unique position to strengthen and develop the best coverage in Denmark,” said TDC CEO Allison Kirkby.

“TDC has connected all over Denmark for almost 140 years, and the new licenses ensure that Danish consumers, companies and society enjoy new experiences, services and the many opportunities that 5G offers.”

With ambitious plans to rollout 5G across Denmark by the end of 2020, this is certainly an aggressive sign of intent from TDC. The telco paid NOK 1.6 billion, roughly €210 million, for its haul, while 3 Denmark paid a total over roughly €68 million. TT Network paid €14 million for its 700 MHz assets and nothing for 900 MHz, though it will be charged with coverage obligations.

As it currently stands, according to Ovum’s WCIS database, TDC is currently the market leader with 42% market share, TT Network controls roughly 40% of subscriptions, while 3 collects the remaining 18%.

While these prices might seem ludicrously cheap in comparison to other spectrum auctions which have been taking place around the bloc, Denmark’s population of 5.8 million ranks it at 111th worldwide, while its land mass ranks at 130th.

Altice still under pressure to make Europe work

Revenues are down across the continent, but telecoms group Altice is pointing to healthy mobile acquisitions in France as a glimmer of hope.

With France accounting for almost 2/3 of total revenues across the now separated European business, Altice could use some good news. Promotions might have taken a bite out of the spreadsheets, but with 1.3 million subscription gains in 2018, the management team is suggesting there might be an end to the gloom.

“In 2018, we have completed the reorganization and simplification of Altice Europe’s structure, with the separation of Altice USA from Altice NV effective on June 8 and a drastic management change,” said Patrick Drahi, founder of Altice. “Altice Europe has achieved all of its FY 2018 guidance, with the successful operational turnaround leading to very strong subscriber trends.

“The significant and continued investments in both fixed and mobile networks, as well as the consistent improvements in customer care, led to a material reduction in complaints from customers and significantly lower churn rates on all technologies. We already see a tangible inflection in Portugal and France, paving the way for growth in 2019, underpinned by our strategy in infrastructure and content.”

While Altice is still not out of the woods, the 1.3 million adds across 2018 surpasses the customer churn the business has been swallowing since its acquisition of SFR in 2015. The management team is also bragging about a 30% reduction in churn, Q4 2018 vs. Q4 2017, and an improvement in network quality metrics, customer satisfaction increased 20% year-on-year for the final quarter.

The company does seem to be heading in the right direction, but you have to place some context on the situation. Debt currently stands at €28.8 billion, more than double the annual revenues of the business, suggesting there might be a few divestment quests over the short- to medium-term future.

Telecoms industry set to finally get the recognition it deserves

Hard working telecoms industry professionals are set to finally emerge from decades of bleak anonymity thanks to the new, improved Glotel Awards.

The 2019 version has just been launched and is open for entries. Now in its seventh year the event is single-handedly responsible for plucking telecoms vendors, service providers and the general ecosystem from obscurity and putting them on the pedestal they richly deserve. It would only be slightly hyperbolic to say the awards change people’s lives.

But the awards team passionately believe you can never have too much philanthropy, so have spent every waking moment since the triumphant 2018 event racking their brains for ways to improve it further, seemingly impossible though that might seem. So this year it has a bunch of new categories a shiny new brand and many other juicy surprises up its sleeve.

“Last year was a great laugh, with Russel Kane warming up the room perfectly and a really broad selection of winners from across the industry,” said Scott Bicheno, Editor of Telecoms.com. “I don’t know how Sophie and her team do it, but somehow they’ve managed to raise the bar once more and I’m counting the days until the next Awards evening already.”

“I don’t know what the telecoms industry would do without you lot, if I’m honest,” said some bloke Bicheno met in the pub. “I’ve just about had it up to here with vendors and operators not getting the recognition they deserve so I’d like to buy you all a drink. Just pints mind, no cocktails or nothing like that.”

All that remains is for you, yes you vendor whose always complaining about how nobody has heard of you, to go to the Awards site and see which category you think best fits what you do. The 2019 Glotel Awards will be the biggest and best yet and, quite frankly, you can’t afford not to be involved.

Defiant Huawei reports 20% revenue growth

In spite of the growing geopolitical spat it has found itself in the centre of, Huawei reported $107 billion in total revenues for the 2018 financial year, up 20% year-on-year.

The consumer business unit is now clearly the most successful, though there is still minor momentum in the carrier business. This is the unit which has been suffering the most through the political scrutiny, though there have been some rays of sunshine.

Although the consumer business unit grew 45%, astronomical growth in an overarching sluggish segment, revenues in the carrier business declined by 1% year-on-year. This business unit has declined, but when you consider context, few will complain with these figures.

A 1% decline is still a decline, but Huawei has now collected 39 5G commercial contracts and shipped 50,000 5G base stations globally. In the month since Mobile World Congress, Huawei has collected an additional five contracts and shipped 10,000 base stations. Not a bad return for a business which has become the political punching bag of the world.

“Through heavy, consistent investment in 5G innovation, alongside large-scale commercial deployment, Huawei is committed to building the world’s best network connections,” said Guo Ping, Huawei’s Rotating Chairman (pictured).

“Throughout this process, Huawei will continue to strictly comply with all relevant standards to build secure, trustworthy, and high-quality products. As we work towards this goal, we have been explicitly clear: Cyber security and user privacy protection are at the absolute top of our agenda.”

Looking at the numbers, total revenues hit roughly $107 billion, year-on-year growth of 20%, while profits jumped 25% to $8.8 billion. This is a slight dip on the 27% growth from twelve months ago, but it is still a very strong performance. The consumer unit clawed in roughly $51.98 billion, the carrier business accounted for $43.80 billion and enterprise brought in the majority of the rest. A very small fourth business unit focusing on cloud is worth keeping an eye on, but today this is less than 1% of the group’s total revenues.

Taken in isolation, you wouldn’t think this is a company which is facing intense scrutiny and aggression from US politicians. The numbers tell a healthy story, but we all know there is a political storm brewing around the vendor.

This week has seen another hurdle thrown in front of the Huawei thundering train, with the Huawei Cyber Security Evaluation Centre (HCSEC) releasing a new report questioning the ability of the vendor to fix software mistakes. The HCSEC has stopped short of calling for a ban, however it is a damning opinion on Huawei’s security credentials.

As we understand it, Huawei was informed of the report 48 hours prior to its publication and while it will not necessarily be thrilled with the outcome, it will have to swallow the opinion. Huawei’s DNA is built in the hardware world therefore it is unsurprising the firm is suffering some complications in the software segments. However, Huawei is unlikely to be alone in with this challenge.

Huawei’s competitors are facing the same challenge having also evolved from the hardware businesses. All of these vendors are learning the ropes, adapting business culture and attempting to link up different acquisitions into a fluid, cohesive offering. Huawei is facing criticism, partly as it is a proxy for the Chinese government, though software is a difficult business which everyone is finding challenging.

Ultimately these numbers tell a story which we have suspected might been the case for a while. Huawei is not a company which will be killed off by the political climate, but it will not dominate the 5G era in the same way it championed the 4G.

Spotify’s ‘Duo’ tariff gives a whiff of what’s to come

Sharing accounts might be the norm in the world of content streaming platforms, but Spotify’s new ‘Duo’ tariff might be a sign of changing attitudes.

In many homes throughout the world, streaming platforms are shared. This is a truth which is generally accepted as the norm, but it does technically violate the terms and conditions of the service and does impact the experience for the user. For example, if users are sharing a premium Spotify account, it can only be used on one device at any point.

Duo seemingly addresses this point and does so at a price point which is a lot more palatable. For €12.49 a month, users can link two accounts to the same bill, offering two ‘tailored’ experiences but with a bundling discount and a single point of payment.

Spotify has already experienced some joy with the idea of bundling having launched the family plan. Here, six profiles can be linked into the same bill for €14.99 a month. Increasing premium subscriptions being reported during earnings calls suggest this is perhaps having a positive impact on the business.

Spotify

Netflix is another streaming platform where users may be taking advantage of how easy it is to connect and share passwords. Although Netflix does allow up to five profiles on a single account, there is little preventing these profiles from being shared outside the home. Netflix has not seemingly made a massive fuss of this so far, though we suspect this was not the desired outcome.

Ultimately these are commercial entities seeking profit. The perfect scenario for these organizations will be for every user having their own subscription, though the practice of password sharing contradicts this; why would you spend £9.99 a month when you can simply log into Mum and Dad’s account?

While there is still room for subscription growth, this is not necessarily a massive issue for the OTTs, but there will come a day where they will have to start thinking about how to tackle the issue. Considering how quickly the world is adopting the new content status quo of entertainment on demand, it won’t be too long before that glass ceiling is hit.

Spotify’s approach is an excellent way to tackle the issue of password sharing. At €12.49, Spotify will not be hording in a tsunami of profits, but it will be gaining more revenue in effectively the same position. There are two users sharing an account, paying a single bill; the platform is being used by two people. With Duo, both users are still using the service, but Spotify is collecting more revenue. It’s as close as you can get to free money.

How the other OTTs plan on tackling this issue remains to be seen, though we suspect they almost certainly will. Content is becoming an increasingly expensive habit to fuel, and at some point the companies will have to be true to their terms and conditions.

Facebook faces hyper-targeted advertising lawsuit

The US Department of Housing and Urban Development (HUD) has lodged a lawsuit against Facebook, challenging the hyper-targeted big data model which has made OTTs billions over the years.

Quoting the Fair Housing Act, the HUD has claimed Facebook is breaking the law by encouraging, enabling, and causing housing discrimination. The Fair Housing Act prohibits discrimination in housing and housing-related services, including online advertisements. Facebook’s advertising platform is said to discriminate individuals based on race, colour, national origin, religion, sex, disability and familial status, violating the Act.

“Even as we confront new technologies, the fair housing laws enacted over half a century ago remain clear – discrimination in housing-related advertising is against the law,” said General Counsel Paul Compton.

“Just because a process to deliver advertising is opaque and complex doesn’t mean that it’s exempts Facebook and others from our scrutiny and the law of the land. Fashioning appropriate remedies and the rules of the road for today’s technology as it impacts housing are a priority for HUD.”

Complaints were originally raised by the HUD last summer, though the two parties have been in discussions to come to some sort of settlement to avoid legal action. Reading between the lines, talks have broken down or the HUD leadership team wants to give the impression it is taking a more hardened stance against the social media segment.

Although it should come as little surprise Facebook is facing a lawsuit considering the ability for Mark Zuckerberg to stumble from one blunder to the next, this one effectively challenges the foundations of the business model. Hyper-targeted advertising is the core not only of Facebook’s business, but numerous other companies which have emerged as the dawn breaks on the blossoming data-sharing economy.

What is worth noting is this is not the first time Facebook has faced such criticisms. The American Civil Liberties Union (ACLU) has also challenged the social media giant, and earlier this month Facebook stating it was changing the way its advertising platform was set up to prevent abuses with the targeting features.

“One of our top priorities is protecting people from discrimination on Facebook,” said Facebook COO Sheryl Sandberg. “Today, we’re announcing changes in how we manage housing, employment and credit ads on our platform. These changes are the result of historic settlement agreements with leading civil rights organizations and ongoing input from civil rights experts.”

As a result of the clash with the ACLU and other parties, Facebook agreed to remove any gender, age and race-based targeting from housing and employment adverts, creating a one-stop portal instead.

According to the HUD, Facebook allows advertisers to exclude individuals from messaging based on where they live and their societal status. For example, whether someone is a parent or non-American, these categories have been deemed discriminatory. Facebook also allows advertisers to effectively zone off neighbourhoods for campaigns, which is also deemed a violation of the Act. By bringing together data from the digital platform and other insight from non-digital means, HUD is effectively challenging the legitimacy of digital and targeted advertising.

As with other similar cases, the HUD is bringing attention to the light-touch regulatory landscape for the internet economy. While traditional advertising is held accountable by strict rules, the internet operates with relative freedom. This is partly down to the age of mass market media online, it is still comparatively new, and the fact few bureaucrats understand how the data machines work.

What is worth noting is that this is an incredibly narrow focus for the HUD, though should it be successful the same concepts could be applied, and other elements of the Facebook hyper-targeted advertising model could be challenged.

Facebook might be the target here, though many companies will be watching this case with intrigue. Precedent is a powerful tool in the legal and regulatory world, and should the HUD win, the same business model which is being applied elsewhere would be compromised also.

Open source and collaboration stacks up in telco virtualization on the cloud

OpenStack Ecosystem Technical Lead Ildikó Vancsa drives NFV related feature development activities in projects like OpenStack’s Nova and Cinder, as well as onboarding and training. The Network Virtualization event team caught up with her ahead of Network Virtualization & SDN Europe in May.

“I’m an open source advocate both personally and professionally and when the movement towards virtualisation and the cloud started, telcos started looking into OpenStack and we began to explore how they could use us,” she explained.

“It has been a very interesting journey, even if it hasn’t always been easy. Virtualisation really is a transformation both from mind set perspective as well as technology perspective,” she said.

The concept sounds simple enough – lift functions from a physical hardware stack and put it into a virtual machine in the cloud. The realty is quite different. In an ideal world, Vancsa suggested you would just rewrite everything from scratch, but this approach is not possible.

“It’s a short sentence to summarize it but it’s a really hard thing to do; especially because those functions are often tightly coupled with specialised hardware,” she said.

This hardware traditionally represented the whole functions stack, all the way out to software. As Vancsa put it: “We needed to support this journey while at the same time looking for where network functions can go. We need to be able to support the legacy network functions as well as providing an environment for new applications, written with the with this new mind set”.

“We do not have to reinvent the wheel and we [OpenStack] didn’t try that. We worked with companies and vendors in the in the NFV and networking space to be able to plug the components that they prefer to use into OpenStack and provide the functionality that they need,” she said.

OpenStack has now moved away from being one huge code stack to become more modular, offering standalone components such as load balancing as a service.

One crucial aspect of getting OpenStack right is collaboration across telco as open source becomes more and more widespread. In Vancsa’s words: “Back in the old days you had one vendor and they supplied your hardware and software and it was all tightly integrated and, no questions asked, it was supposed to work.”

“As open source has become more popular in telecom environments, we see more operators picking up commodity hardware and have a couple of vendors supplying software. So they might have one vendor supplying the MANO components and another for the orchestration layer,” she explained. “This means it is critical to keep an eye on interfaces and interoperability.”

For Vancsa, collaboration, open infrastructure and open source software are vital for virtualization to succeed, especially as telcos move more into the cloud, and events such as Network Virtualization & SDN Europe are vital for this.

“You get the chance to talk to people and basically make the first connection after which is just so much easier to collaborate on other forums,” she enthused.

 

Ildikó Vancsa was also a panellist on a recent webinar from Network Virtualization & SDN Europe on Virtualzation and the Cloud. You can listen to the webinar on-demand here. Network Virtualization & SDN Europe 2019 takes place 21-23 May at the Palace Hotel in Berlin. Find out more here.

UK issues first Huawei security report since US ban pressure

The UK’s dedicated Huawei Cyber Security Evaluation Centre (HCSEC) has issued its first report since the US increased pressure to ban the firm.

HCSEC is based in Banbury, Oxfordshire and its oversight board issues annual reports raising any concerns about the company’s practices.

Last year’s report was noted as the first where HCSEC could no longer assure that risks had been mitigated due to concerns around Huawei’s engineering processes. Security officials were said to be frustrated at the slow progress by Huawei in addressing the problems.

The report notes that “no material progress has been made by Huawei in the remediation of the issues reported last year, making it inappropriate to change the level of assurance from last year or to make any comment on potential future levels of assurance.”

More concerningly, however, is the report highlights that further significant technical issues have been identified which pose new risks to UK telecoms networks.

“CSEC's work has continued to identify concerning issues in Huawei’s approach to software development bringing significantly increased risk to UK  operators, which requires ongoing management and mitigation,” the report states.

Operators such as Vodafone and Three have lobbied against banning Huawei due to existing use of the vendor’s equipment. They argue it would be costly to replace Huawei equipment while also causing a significant delay in the rollout of 5G services.

"We've already started to deploy equipment for when we launch 5G in the second half of the year," said Three CEO David Dyson. "So if we had to change vendor now, we would take a big step backwards and probably cause a delay of 12 to 18 months."

"Huawei met all of the standards that the other operators met, and we felt at the end of that process that Huawei was the right choice for our customers and for our business."

Commenting on the centre’s report, a Huawei spokesperson said:

“The 2019 report again recognises the effectiveness of the HCSEC. As the report says, ‘The oversight provided for in our mitigation strategy for Huawei's presence in the UK is arguably the toughest and most rigorous in the world. This report does not, therefore, suggest that the UK networks are more vulnerable than last year.’

The report details some concerns about Huawei's software engineering capabilities. We understand these concerns and take them very seriously. The issues identified in the report provide vital input for the ongoing transformation of our software engineering capabilities. In November last year, Huawei's Board of Directors issued a resolution to carry out a company-wide transformation programme aimed at enhancing our software engineering capabilities, with an initial budget of US$2bn.

A high-level plan for the programme has been developed and we will continue to work with UK operators and the NCSC during its implementation to meet the requirements created as cloud, digitization, and software-defined everything become more prevalent. To ensure the ongoing security of global telecom networks, the industry, regulators, and governments need to work together on higher common standards for cybersecurity assurance and evaluation.”

Until Huawei addresses the problems with its engineering processes, the HCSEC oversight board advises it will be difficult to manage the risk in the context of UK deployments. Given the firm’s slow response, the oversight board expresses doubt it will feel able to change its advice.

“At present, the Oversight Board has not yet seen anything to give it confidence in Huawei’s capacity to successfully complete the elements of its transformation programme that it has proposed as a means of addressing these underlying defects.”

While the centre hasn’t found any evidence of state-backed espionage, which is the main concern of the US, it has reported ‘several hundred vulnerabilities and issues’ to UK operators.

Interested in hearing industry leaders discuss subjects like this and sharing their experiences? Attend the Cyber Security & Cloud Expo World Series with upcoming events in Silicon Valley, London, and Amsterdam to learn more.

DT CEO moans as bidding in German 5G auction tops €1 billion

Just for a change operators are moaning about the amount they have to pay for licensed spectrum, arguing that leaves less cash for infrastructure.

This time the country in question is Germany, which is in the middle of a 5G auction its operators have had a problem with from the start. According to the regulator bidding has already topped a billion euros and, while it still has a way to go before reaching the orgiastic excesses of the Italian one, muttering about the cost has already begun.

Commenting at its recent AGM, DT CEO Tim Höttges made it clear he has a problem with the fact that not all available spectrum is even being offered in the action, which he reckons is bound to have an inflationary effect. “An artificial shortage of public resources is being created, which may push up the price,” he said. “In the end, there is no money for the build-out.”

There was also some general dissent about excessive regulation, ease and speed of access to new cell sites and access regulation for new fibre networks that is considered counterproductive. But the main theme of his speech at the AGM was ‘sharing and participation’ and featured largely generic sentiments about the importance of communications networks and how totally committed to them DT is.

This auction is expected to hit at least three billion euros but, as we saw in Italy, auctions can easily become frenzied. European operators seem to be feeling increasingly inclined to challenge the terms of spectrum auctions but so far their attempts at legal challenges have yielded little. It does seem odd that the German state has held back a bunch of spectrum, however, and it would be interesting to know the rationale for that.