Europe takes another chunk out of Qualcomm profits

The European Commission has announced it will once again fine Qualcomm for market abuse, with the investigation this time focusing on 3G baseband chipsets.

It seems time does not heal all wounds as this investigation focused on market abuse between 2009 and 2011, and a concept known as ‘predatory pricing’. In short, Qualcomm used its dominant market position to sell products to strategically important customers, below cost price, to effectively kill off any competition before it had a chance to gain momentum.

“Baseband chipsets are key components so mobile devices can connect to the Internet,” said Margrethe Vestager, the Commissioner in charge of competition policy. “Qualcomm sold these products at a price below cost to key customers with the intention of eliminating a competitor.

“Qualcomm’s strategic behaviour prevented competition and innovation in this market and limited the choice available to consumers in a sector with a huge demand and potential for innovative technologies. Since this is illegal under EU antitrust rules, we have today fined Qualcomm €242 million.”

Although the European Commission affords the opportunity for companies to use market advantages to seek profits, but when it becomes anti-competitive the bureaucrats draw a line. This is what has happened in this instance.

At the time, Qualcomm controlled roughly 60% market share of the UMTS baseband chipset segment, three times as great as the nearest competitor, though this position was used to kill competition before it had a chance to emerge. Using its relationships with Huawei and ZTE, Qualcomm sold products at low enough prices no-one could compete.

This is the challenge with segments which have such high-barriers to entry, key customer accounts are critically important, such are the investments which need to be made in R&D. Qualcomm effectively created a loss leader of these products to stem the critical flow of funds into any competition which could develop from the smallest glimmer of hope. In this case, the firm in question was Icera, which was eventually acquired by Nvidia.

The fine in this case represents 1.27% of Qualcomm’s turnover in 2018 and will hopefully deter companies from engaging in anticompetitive activity in the future.

For Vestager, this is another parting shot as she wraps up her tenure in the competition policy office, a position she has held since 2014.

The Commissioner has built a reputation of taking on big tech who make a habit of practising in anti-competitive activities. Qualcomm has been a frequent combatant of Vestager, though she has got plenty of experience dealing with the likes of Google and Amazon also, the latter of which is the subject of the latest probe.

Assuming the tech giants will be happy to see the back of her would be very reasonable, though it remains to be seen who will replace the feisty and combative Vestager.

EE wins the grand slam in latest OpenSignal UK report

The latest OpenSignal report shows EE has come on top in all five categories, though the winning margin in video experience was narrow.

The latest report on the UK’s mobile network experience published by the network rating firm OpenSignal pitted the country’s four nationwide operators against each other on five measurements: 4G Availability, Video Experience, Download Speed, Upload Speed, and Latency. EE has won every category.

Although EE has been in a leading position in delivering mobile experience, the competition was closer in previous OpenSignal assessments. A year ago EE and Vodafone tied in two out of four categories. Half a year ago, Vodafone was still on par with EE on delivering the lowest latency. But the BT-owned operator has opened up a gap over its competitors in most measurements lately.

The one area that EE was not a comfortable winner was video experience. As we reported earlier, higher download speed does not necessarily deliver the best video experience, according to OpenSignal’s analysis. Other technologies including traffic management and latency minimisation also feature in the evaluation. Therefore although EE’s download speed is more than 40% faster than its closest competition (Vodafone) and it also has registered the lowest latency, EE only marginally beat Vodafone in video experience. It actually came the last if video experience had been judged on 3G only (3 came on top). But thanks to the superior 4G availability EE customers would not need to fall back on 3G much when streaming video.

The report also provides regional comparison, with the country broken down to twelve regions: Eastern, East Midlands, London, North East, Northern Ireland, North West, Scotland, South East, South West, Wales, West Midlands, Yorkshire and Humber. The report dismissed the so-called “North/South divide” as a myth, with some of the “top scores appearing in the North East, North West, West Midlands and Yorkshire and Humber regions”. In an earlier report measuring 4G speed, the firm also noted that London was only mid-table, with the highest 4G download speeds registered in places like Bristol, Cardiff and Birmingham.

Here are the countrywide results:

OpenSignal_chart 4G Availability April 2019

OpenSignal_chart Video Experience April 2019

OpenSignal_chart Download Speed April 2019

OpenSignal_chart Upload Speed April 2019

OpenSignal_chart Latency April 2019

Money is piling up in the US 24 GHz auction

Over 30 companies have put more than $560 million in bid money on the table at FCC’s auction for the 24 GHz frequency. And this is only the beginning.

Following the underwhelming auction of the 28 GHz (dubbed Auction 101) spectrum, which only returned $703 million, the new auction of the 24 GHz (dubbed Auction 102) is heating up quickly. The auction started last Thursday and has gone through 11 rounds of the first phase of the auction, or the “clock phase”, when participants bid on a Partial Economic Area (PEA) blocks. By the end of round 11, the gross proceeds have reached a total amount of $563,427,235. There are still two days, or six more rounds to go, before the winners can move to the next phase of the process.

The “assignment phase” will allow the winners from the first phase to bid for specific frequency licence assignments. The total bid value for the 24 GHz frequencies could go up to between $2.4 billion and $5.6 billion, according to the estimate by Brian Goemmer, founder of the spectrum-tracking company AllNet Insights & Analytics, when he spoke to our sister publication Light Reading.

The key difference the has driven up the interest from the bidders for Auction 102 is the locations where the frequencies are made available. While major metropolises like New York, Los Angeles, or Chicago, were absent from 28 GHz auction, they are all on the current 24 GHz auction together with other major cities that would be the candidates for the 5G services to roll out in the first wave.

Bidders have included AT&T, Verizon, T-Mobile, Sprint and more than 30 other companies. The FCC will announce the winners including those from Auction 101 only after both phases of Auction 102 are completed.

In addition to bidding for mmWave frequencies, operators like AT&T are also actively refarming the lower frequency bands in their possession that are used to provide 3G services. AT&T sent a notice to its customers in February that it will stop 3G only SIM activation, urging customers to move to LTE. The company said “we currently plan to end service on our 3G wireless networks in February 2022.” Specifically the company is planning to refarm the 850 MHz and 1900 MHz frequency bands, saying “it may be necessary for us to turn down one band of our owned and operated 3G network, such as 1900 MHz or 850 MHz service”.

Considering the AT&T only switched its 2G networks off at the beginning of 2017, this is a clear sign that the generational transition of mobile telecom services is accelerating. Earlier in the middle of last year, Verizon confirmed that it will shut down its 3G CDMA networks by the end of 2019. Even earlier at the MWC in 2017, T-Mobile’s CTO Neville Ray said the company was looking to sunset both GSM and WCDMA.

Cuba enters mobile internet age with 3G few can afford

Cuba’s telecom operator will offer 3G data service to prepaid users, but with high-tariffs one question remains; can any of the locals actually afford it?

The previously isolated communist state has undergone gradual reform since the more pragmatic Miguel Diaz-Canel took over at the helm, and one of the goals is to catch up the rest of the world on internet adoption and to develop an information society. As an important step towards this direction, Cuba’s the state-owned telecom operator ETECSA (Empresa de Telecomunicaciones de Cuba S.A.) announced (in Spanish) that the company will start offering 3G data services to its prepaid customers from 6 December, one year after it started offering internet connections to residential locations. Before that, most Cubans could only go online from internet cafes.

The monthly packages (in Spanish) start at 600 MB data which will cost 7CUC ($7), going up to 1 GB (10CUC), 2.5 GB (20CUC), and 4GB which will cost 30CUC. Another 300 MB will be granted for free on top of all packages for visiting local website (domain .cu). Otherwise, 1CUC can get 50 MB For email use only (on ETECSA’s email service Nauta). The service is on 900 MHz only, meaning handsets will have to be compatible to that specific frequency. Users applying to use the service can activate directly over-the-air with the operator.

internet_movil_planes

There is no recent data on Cuban income from sources like the World Bank. Earlier data showed the average monthly salary was about $27 to $32, though independent survey and research have indicated that many locals do make extra income through different channels. Even with the additional income, the data packages are way too high for most users. Research in other emerging markets has shown that the adoption of broadband will take off when the cost of the package reaches below 5% of monthly disposable income.

The operator could be pricing its packages to limit the number of users, as its networks are not capable of coping with high traffic volume yet. As the national monopoly, ETECSA has installed 1,078 2G base station, and 789 3G base stations, according to its published data. In its announcement the operator also warns users that in the first days of the service there may be down time, and asks consumers to inform the operator through official channels.

According to research by Ovum, mobile penetration in Cuba went just over 44% by the end of Q2 this year. The country’s internet population (“permanent internet accounts”) has reached 1.9 million.

Germany frees up the whole of C-Band for 5G and the GSMA approves, sort of

The German government has decided to make the entire 3.4-3.8 GHz band available for 5G use, which is a good idea.

For 5G to do its thing, it needs big chunks of continuous spectrum to ‘fatten the pipe’. Piecemeal auctions of 3.4-3.8 GHz spectrum (otherwise known as C-Band) such as we had in the UK earlier this year, are not as useful as offering up the whole lot in one go. The eventual outcome may end up being the same, but the whole process is a lot more complicated.

This decision has been met with approval by the mobile industry trade association, the GSMA. “The C-Band is the most vital frequency band for 5G,” said Mats Granryd, Director General of the GSMA. “Germany is demonstrating 5G leadership in the timely release of this vital spectrum, but risks undercutting its 5G future with unnecessary obligations. Spectrum is a limited resource and it must be used and managed as efficiently as possible to ensure a 5G future that will benefit all.”

Among the GSMA’s regulatory gripes are proposed coverage obligations for 3.6 GHz spectrum, which it says disregard the laws of physics. Since the time of Isaac Newton this had been frowned on by polite society and the GSMA has chosen to use this emotive concept to point out what short range these high frequencies have.

They do seem to have a point here. 5G is all about capacity and surely coverage obligations can be left to earlier generations in the short term and 5G over lower frequencies in the long term. As characterized by the GSMA this stipulation seems to be gratuitous, counter-productive and a classic example of regulation for the hell of it.

Other than that there are some inevitable whinges about roaming obligations and high reserve prices for the auction. In the latter case we have sympathy for the GSMA position as any attempt by the German government to push up the price of spectrum is a blatant cash grab and an indirect tax on mobile subscribers.

EE holds onto Opensignal MNO crown

EE has held onto its position as the best performing UK MNO according to the latest figures from Opensignal.

For 4G download performance, EE maintained its leadership position with average download speeds of 29 Mbps between June and August, while it also led in upload speed, latency and availability. This is not to say there weren’t improvements elsewhere, Vodafone grew its average 4G download to 21.9 Mbps, though Three’s dropped with the telco slipping down to third place in the performance rankings.

4G might not have been a fruitful playground for Three, but it did steal the top-spot for 3G speeds off EE. With average speeds of 7.8 Mbps it edged just ahead of EE at 7.2 Mbps, though this will come as little comfort as telcos increasingly look to re-farm 3G spectrum to bolster 4G performance.

Interestingly enough, O2 is still maintaining its position as the leading telco in terms of market share, despite a damning review of the telco from Opensignal. O2 sat in last place for all categories aside from latency (3G and 4G) and availability, where it was second behind EE. O2 might arguably have the weakest network in the UK, the power of promotions seems to counter this position. The Priority loyalty programme is perhaps proving its worth in gold here.

While many will preach the benefits of having the best network, these figures show it’s not always about being the fastest.

Opensignal Awards

Ofcom isn’t happy with EE and Vodafone’s coverage predictions

UK telecoms regulator Ofcom has opened separate investigations into coverage predictions offered up by EE and Vodafone.

In what seems like a fairly pedantic move Ofcom has announced it’s looking into information provided by the two MNOs when it asked them to say how much of the country they expect to cover. Bizarrely EE is suspected of overestimating its 3G coverage, while Vodafone may have under-predicted its 4G coverage.

Why any of this matters is unclear. Ofcom uses these estimates for its own studies into UK mobile coverage, which are ultimately politically sensitive due to the tendency for politicians to grandstand on behalf of those people with dodgy coverage. It’s possible that Ofcom is getting political heat and is looking for scapegoats. Here are the two Ofcom statements.

“On 1 October 2018, Ofcom opened an investigation into EE’s compliance with requests for 3G mobile coverage predictions across the UK under these rules. This followed on from the identification by Ofcom of errors in the 3G/2100 MHz coverage data that EE provided which meant that its 3G coverage was over-predicted, particularly in rural areas.”

“On 1 October 2018, Ofcom opened an investigation into Vodafone’s compliance with requests for 4G mobile coverage predictions across the UK under these rules. This followed on from the identification by Ofcom of errors in the 4G/800 MHz coverage data that Vodafone provided which meant that its 4G coverage was under-predicted, particularly in rural areas.”

As indicated by the beeb, the operators will claim some combination of innocence, mitigation and contrition, so it’s hard to imagine anything significant resulting from these probes. Maybe Ofcom just likes to throw this sort of thing at operators every now and then just to keep them on their toes.

BT targets 2022 for 3G power down

We’re not too sure whether we missed an announcement over the last couple of months, but BT has now stated it intends to turn off 3G by 2022.

Speaking at the 5G World event in London, BT’s CTIO Howard Watson has essentially made the 2022 target public. The target isn’t a hard deadline, more of a lofty ambition, fitting into the wider network transformation strategy as the business attempts to enter the digital world.

“We see 2G and 4G co-existing, but the demand of 3G lessening considerably,” said Watson.

As you can see from the slide below, there are a number of objectives over the next four years, one of which is the 3G switch off. Although we are not surprised these conversations are happening inside the BT business, we’re somewhat taken back there hasn’t been more communication with the industry about the ambitions.

Of course, BT is not alone. Three has stopped selling 3G devices and is in the process of re-farming the spectrum to boost performance in 4G. Orange hasn’t put any timelines for the switch-off date, but progress is being made. Soon enough 3G will become redundant, partly thanks to the cost-effectiveness of 4G devices, but also because spectrum is a finite (and expensive) resource. Re-farming the spectrum into 4G and 5G is an important process.

That said, perhaps this is genuine evidence progress is being made. The fact there are concrete conversations about turning off 3G suggests there is notable progress being made in 5G. Some might assume operators are more talk than walk, but maybe we aren’t giving them enough credit.

OpenSignal report reveals relative performance of UK MNOs

The latest State of Mobile Networks: UK report from OpenSignal has EE as the clear leader according to its metrics, with O2 and Three needing to raise their game.

You can see the charts for each of the nationwide 3G and 4G metrics below, but to cut a long story short EE won nearly all of them. It also leads in 4G availability with 86.6%, followed by O2 on 83.4%, Vodafone on 79.5% and Three on 66.6%. However our average 4G speed of 23.1 Mbps apparently lags even Armenia and Mexico. Maybe the extra 4G spectrum O2 just got hold of will help it do better in 4G next time.

Opensignal April 2018 4G speed

Opensignal April 2018 4G latency

Opensignal April 2018 3G speed

Opensignal April 2018 3G latency

Opensignal April 2018 regions

Google takes wifi on a road trip to Mexico

Over the course of 2017 Google was making a lot of noise about its connectivity mission in India, but now it is sharing its wifi love in Mexico.

Google has announced it is working with Internet service provider Sitwifi to convert their existing hotspots to Google Station, the internet giants own wifi platform. Google Station will now be available in 60 high-traffic venues across Mexico City and nationwide, including airports, shopping malls and public transit stations. The aim is to take this number north of 100 by the end of the year.

“In Mexico, the third highest Internet penetration country in Latin America, most people access the web through mobile,” Google’s Jack Fermon said in a blog post. “But even as data plans are more affordable than ever, people are always looking for ways to enjoy the web without using up their data. And access to information is still a challenge for many.”

Mexico is now the third country to gain the attention of the Google Station team, following successful ventures in India and Indonesia. In India, the initiative started with train stations but has now been expanded to smart cities, following a partnership with engineering and construction company Larsen and Toubro. This partnership will focus on bringing 150 Google Station hotspots to the city of Pune, on top of the 270 railway stations which are already connected.

Indonesia was next on the road trip after partnerships with service providers CBN and FiberStar. This initiative is focused on bringing ‘hundreds’ of hotspots to the regions of Java and Bali. The rollout also included the launch of its data-friendly YouTube Go app, after the same version proved to be a hit in India. As with India, Google is getting into the connectivity game in a region which is seemingly about to explode into the digital economy.

Mexico could be seen as another country which fits the bill. It has a large, relatively Westernised population which is currently underserved from a connectivity perspective in certain areas. While there are internet services in all of these countries, the penetration of areas such as ride-hailing, eCommerce or digital banking is low compared to European or North American markets. It is a sensible place for Google to make a mark as it looks to supplement its core search advertising business.

As with India and Indonesia, Google will provide free, high-bandwidth internet access to individuals who would not be able to gain access otherwise. The initial outlay might be a bit of a cost, but don’t forget the more people who are on the internet, the more people who will be using the default Google browser and the more money the internet giant makes. As with everything in the business world, philanthropy comes with a profit in mind.