Thursday, January 28, 2010

SK Telecom Reaches 24 Million Users, ARPU Edges Down

As of the end of 2009, SK Telecom was serving 24.25 million access lines, up by 5.3% compared to the end of 2008. Average revenue per user (ARPU) edged down by 1.3% to KRW 42,469 with the expansion of various discount plans.

For the fourth quarter of 2009, the revenues increased by 3.1% quarter-on-quarter to mark KRW 3.1 trillion. Also compared to the same quarter last year, the operating income went down by 5.5% to stand at KRW 443.1 billion, while EBITDA increased by 3.4% to mark KRW 1.095 trillion.

EC Takes Action against France over "Telecoms Tax"

The European Commission launched a legal action against France relating to the "telecoms tax" on telecommunications operators that was introduced in March 2009. To offset the ending of advertising on public TV channels, France has introduced a specific tax on the turnover of telecommunications operators in connection with their licence to provide telecoms services (including Internet and mobile phone services).

However, the Commission takes the view that in reality this tax constitutes an administrative charge that is incompatible with European law.

The EC estimates the annual revenue from the new tax is around 400 million euros. This tax is payable by telecommunications operators which, in accordance with the French Telecoms Law, provide a service in France.

"I have expressed doubts about the telecoms tax on a number of occasions" , said Viviane Reding, the Member of the European Commission responsible for the information society and media. "Not only does this new tax on operators seem incompatible with the European rules, it also concerns a sector that is now one of the major drivers of economic growth. Moreover, there is a serious risk that it will be passed on to customers at a time when we are in fact trying to reduce their bills by cutting termination rates and the costs of mobile phone calls, data transfer and text message roaming."

EC Approves Telefónica O2's Acquisition of Hansenet

The European Commission has cleared the proposed acquisition of Hansenet Telekommunikation GmbH of Germany by Telefónica of Spain. The Commission concluded that the concentration would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it. Telefónica and Hansenet are not major competitors for each other in any of the relevant markets. Moreover, both the horizontal and the vertical relationships between the activities of Hansenet and Telefonica in Germany are limited and the combined firm would continue to face a number of strong, effective competitors, including the incumbent operator Deutsche Telekom.

New EU Telecoms Regulator Begins

The new Body of European Regulators for Electronic Communications (BEREC) officially commenced its activities with its first meeting in Brussels.

BEREC was established by European Council and European Parliament as part of the new EU Telecoms rules that were adopted in December 2009. The new regulatory body is expected to play a key role in strengthening a single telecom market and consistent regulation across Europe. Already there are 12 fixed and 10 mobile telecoms companies offering services in many other EU Member States. Hundreds of service providers are operating across borders. In 2008, Europe's telecoms sector revenues accounted for €351 billion.

The new European telecoms body BEREC will give important expert opinions on the functioning of the telecoms market in the EU. BEREC will also advise, support and complement the independent work of national telecoms regulators, especially when it comes to regulatory decisions with cross-border aspects.

BEREC is made up of the heads of the 27 national telecoms regulators and is assisted by an office that provides the necessary professional and administrative support to BEREC's work. Most decisions will be taken by two-thirds majority and by simple majority when BEREC gives opinions in the context of the Commission's analysis of measures notified to the European Commission by national regulators.

BEREC replaces the "European Regulators Group", a loose grouping of national regulators that could operate on the basis of consensus alone and was not integrated into the EU's regulatory process.

"The first meeting of BEREC will be a step in the right direction for a more competitive telecoms market in Europe. I look forward to seeing real progress in developing further the European single market in telecoms and, in particular, to the positive impact that it will have for Europe's 500 million citizens," said Neelie Kroes, the EU Competition Commissioner.

NTT DOCOMO at 55 Million Users -- Nearly Flat for 2009

As of December 31, 2009, NTT DOCOMO was serving 55.44 million subscriber lines, up by 1.2 million compared with a year earlier. Churn for the quarter was 0.45%, roughly the same level as a year earlier. Due to the popularity of discount plans, aggregate ARPU during the quarter for cellular services (FOMA+mova) decreased 4.5% compared to a year earlier to Y5,470 (about US$60).

The number of handsets sold during the quarter ending December 31 declined by 310,000 units to 4.20 units.

For the nine months ending December 31, 2009, NTT DOCOMO's capital expenditures amounted to Y 484.5 billion (about US$5.36 billion), down 3.2% compared to the same period a year earlier.

Looking ahead, NTT DOCOMO predicts competition will intensify even further in Japan, putting increased pressure on revenues. The company is looking to decrease its network operating costs through a variety of programs.

AT&T Gives Update on Network Upgrade Programs

In its quarterly financial call last week, AT&T executives gave a progress report on the company's network upgrade programs. Some highlights of the call:

  • In 2009, AT&T added 1,900 new cell sites, more than 100,000 new circuits for backhaul, four times our 2008 total.

  • The composite quality index for voice on the wireless network was up 22% in 2009.

  • Data throughput increased more than 19% during the past year.

  • 3G block calls were down 25%.

  • 3G drop calls were down 22%.

  • Congestion in New York City and San Francisco -- In Manhattan, there are periods when nearly 70% of the devices active on the network are data intensive handsets. AT&T is adding third and fourth radio network carriers to maximize capacity on available spectrum. The company is increasing the amount of 3G spectrum and radio capacity by one third in high-volume areas. It is also adding cell towers and upgrading high-capacity antenna systems.

  • HSPA 7.2 -- AT&T has completed the software upgrade to its 3G network nationwide. It currently offers 10 devices that are HSPA 7.2 Mbps capable. The next step is to build out backhaul, focusing first on highest traffic cell sites.

  • AT&T anticipates that the majority of mobile data traffic will be carried over fiber-based backhaul by the end of this year.

  • Already, the first metro clusters with HSPA 7.2 show average throughput increasing nearly 50% during peak conditions.

  • AT&T has not made a clear declaration on whether it will deploy HSPA upgrades beyond 7.2 Mbps.

  • Apple's iPad -- AT&T said it will work closely with Apple in planning for iPad connectivity to the network. The iPad will use HSPA 7.2 Mbps. iPad represents a different revenue for AT&T because it is not subsidizing the device.

  • AT&T is predicting that iPad users will be heavy network users, likely more than iPhone and similar to 3G laptop users. However, many iPad users are likely to use the device at home or in schools, cafes or airports -- places where Wi-Fi networks are usually available. Because users will pay in advance by credit card, AT&T is forecasting that its billing and support costs will be low.

  • 2010 CAPEX -- $18 billion to $19 billion range. That is up 5% to 10% overall versus 2009, with investments in wireless up substantially.

  • AT&T expects a substantial increase in wireless and backhaul CapEx, which will be about $2 billion.

  • The amount of new capacity in the wireless network in 2010 will be 2X greater than in 2009.

  • In 2010, AT&T plans to deploy 2,000 new cell sites. It will also increase deployments of radio network controllers.

  • Ethernet backhaul connections to cell sites will be 10X greater than in 2009. This includes 3X more fiber-to-the-cell-site departments compared to last year.

  • LTE trials -- planned for 2 markets in 2010

  • U-verse -- on track to reach 30 million living units by the end of next year. U-verse revenues nearly tripled over the past year, and on an annualized basis, now approach $3 billion. U-verse TV penetration now approaches 13%, and in areas marketed to for 24 months or more, overall penetration is better than 20%.

An archived webcast is posted in the Investor's section of the company's website.

FCC's McDowell on Broadband Plan: "First, Do No Harm"

For over three decades now, it has been the bipartisan policy of the U.S. Government to keep information services lightly regulated, said FCC Commissioner Robert McDowell, delivering the Free State Foundation Keynote at the National Press Club. The proliferation of broadband and mobile communication technologies has come about, he said, because of a competitive, free market and not because they were mandated by some government authority.

In looking ahead to the National Broadband Plan, which the FCC will present to Congress in March, McDowell said his preference is "that it should not propose heavy-handed industrial policy." He prefers incentives for service providers to invest in extending and upgrading their broadband infrastructure rather than coercive mandates. And before setting regulations, he thinks the government should first ask "What exactly is broken that only the
government can fix?"

To deal with anti-competitive conduct by monopolistic players, McDowell suggests that instead of writing new rules, (which will be tied up in court for years anyway), "the FCC could forge a new partnership with the appropriate non-governmental collaborative Internet governance bodies that have worked flawlessly on these issues for years." He believes "this approach, coupled with strict enforcement of our antitrust laws, could very well provide the benefits sought by proponents of new rules without incurring the unexpected costs of a new regulatory regime."

Thomson Changes Name to Technicolor

Thomson has changed its name to Technicolor. Shares in the Paris-based company will trade on NYSE Euronext Paris under the Technicolor symbol (TCH).

Technicolor's mission is to be a provider of production, postproduction, and distribution services to content creators, network service providers and broadcasters. The company is one of the world's largest film processors; the largest independent manufacturer and distributor of DVDs (including Blu-ray Disc); and a leading global supplier of set-top boxes and gateways.