Archive for December, 2009
USA – The virtual economy is set to make billions
December 31st, 2009 | 
Author: In Asia, sales are already around the $5bn mark and rapidly growing.
For many, virtual goods are one of the hottest trends in technology and are fuelling huge growth in the social gaming sector.
“This is just an exploding part of the gaming business right now, said venture capitalist Jeremy Liew.
“It is the most exciting area in gaming,” he said.
Mr Liew, whose firm Lightspeed Venture Partners has invested $10m in virtual goods companies, said the rapid growth of the sector was unprecedented.
“We have seen companies go from nothing in the last 18-24 months to tens and hundreds of millions of dollars in revenue.”
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UK – BT threatens judicial review over spectrum policies
A BT spokesperson told ZDNet UK on Tuesday that the company had sent a letter to the Department for Business, Innovation and Skills (BIS), objecting to proposals to make existing 3G licences indefinite, and to allow greater infrastructure sharing in rural areas.
The proposals, put forward by Independent Spectrum Broker Kip Meek in May, are designed to extend mobile broadband coverage.
“BT has major reservations around the wireless spectrum proposals from the Independent Spectrum Broker,” the BT spokesperson said. “The proposal to extend current 3G licences indefinitely represents a gift of several billion pounds from the UK taxpayer to the mobile operators and is a barrier to competition and innovation in the mobile market.”
The letter stated that should the government proposals go ahead in their current form, BT would seek a judicial review, as the company has “serious concerns” over the plans, BT’s spokesperson said. “We are discussing our concerns with BIS and are hopeful that these will be addressed.”
A BIS spokesperson told ZDNet UK on Tuesday that it had extended a consultation on the Independent Spectrum Broker’s proposals, and that the BIS would not want to prejudge the outcome of the consultation.
“We have received a letter from BT,” the spokesperson said. “Our consultation over a proposed direction to Ofcom on spectrum matters is ongoing and BT, like any other interested party, is welcome to comment on the government’s proposed plans.”
Ofcom said in February that it would consult on proposals in Lord Carter’s Digital Britain report designed to boost available spectrum and ensure universal broadband access.
India – Experts differ over whether or not there is predatory pricing
Mahesh Uppal, a telecom expert, said, “The term predatory pricing cannot apply here. Only players having a large chunk of the market can be accused of predatory pricing, and that too, if they offer their services below cost to make competitors unviable.”
“The pricing offered by new players cannot be predatory as their market share and subscriber base is much lower,” he added.
Leading telecom operator Bharti Airtel had approached Trai some weeks ago asking the regulator to look into the ‘predatory pricing’ offered by new operators.
The ‘rock bottom’ tariffs were lower than the cost structure for some operators and their business model was unsustainable and needed to be inspected, Bharti had said. The new operators, however, said, “We are offering lower prices through our business model. We have worked out our economics well.”
Following the Bharti complaint, Trai had asked some of the other prominent players, including Reliance Communications and Tata Teleservices, seeking details of various plans offered by them. Currently, tariff is under forbearance, leaving it to the market forces.
A senior Trai official said, “As of now, it would be early to say whether the pricing offered by mobile operators are predatory or not.”
“Trai would look into the economics of all the tariff plans offered by the service providers, specifically the new players. We should ensure that the mobile consumers are getting a fair deal. On the other hand, we also need to see whether the telecom industry will sustain on this model, wherein prices have come down to a new low,” the official added.
Almost in retaliation, the Association of Unified Telecom Service Providers of India, the association for CDMA operators, has accused Bharti Airtel of indulging in predatory pricing.
“We see instances of predatory pricing where large incumbent operators offer highly subsidised on-network (within the operators’ own network) calling rates. A similar proposition by smaller players is not as attractive due to their limited subscriber base,” Auspi secretary general S C Khanna said.
Romal Shetty, a telecom analyst with consultancy firm KPMG, said, “Both new and existing players are offering tariffs at a very low price.
“The pricing war was started by new operators as they wanted to grab more and more subscribers. But, this business model is not sustainable, and would impact the telecom industry in the long term.”
Algeria – Orascom appeals USD 596m tax claim
Africa – network expansion is being bankrolled by China
African governments are banking on renewed relations with China to spread communication networks into underserved and rural areas, but their use of condition-free Chinese loans for funding has raised concern in a continent rife with corruption and poor governance.
Chinese network gear vendors Huawei Technologies and ZTE have swept African telecom markets with products priced lower than those of their Western rivals. Their gear has helped expand local mobile and fixed-line networks, but many contracts for the two vendors have been partly or wholly funded by low-interest loans from the Chinese government, analysts say. Those loans are given in Africa largely without conditions such as improved government transparency or protection of human rights, unlike loans from the World Bank or International Monetary Fund that usually have strings attached.
“The fact that a growing number of telecom companies have contracts with Huawei and ZTE is indicative of the fact that the two companies offer good financing arrangements,” Mike Theuri, an analyst at Africa Telecoms, said via e-mail. Equipment from the companies is also reliable for its price, said Theuri.
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“When a cost-benefit analysis is performed, the Chinese vendors are likely to top their European counterparts,” he said.
But China’s use of loans with few strings attached “is a double-edged sword in the sense that in nations where corruption is condoned, it can easily lead to the fostering of greater corruption,” Theuri said.
Business by Chinese companies in Africa has ramped up in recent years in sectors like minerals and energy as well as network gear. The increased business has come as China, a rising geopolitical power hoping to win friends abroad, has also started offering major aid and loan packages to African countries. Last month, at a meeting in Cairo, Chinese Premier Wen Jiabao pledged loans worth US$10 billion for African governments over three years.
The telecom industry is among the fastest growing in Africa and most of the funds are committed to expanding mobile infrastructure. Huawei and ZTE have both worked to tap that growth. ZTE, which earned one-fifth of its total revenue in Africa last year, aims to build its market share there to at least 30 percent, a company spokeswoman said.
Huawei and ZTE are supplying network gear and services in most sub-Saharan African countries for providers such as MTN, Safaricom and Orange (FTE). ZTE’s deals have included the construction of an EV-DO network in Morocco and a WiMax network in Libya, which was billed as Africa’s first and for which Huawei also supplied equipment. ZTE is eyeing populous countries like Nigeria and South Africa for more business, the company spokeswoman said.
