What’s up with… Qualcomm and Meta, telcos vs streaming giants, T-Mobile US

• Qualcomm and Meta double down on metaverse R&D
• Europe’s telcos to present the case against big tech
• T-Mobile US adds to its rural mid-band spectrum pile

In today’s industry news roundup: Qualcomm and Meta press the metaverse pedal to the metal; Europe’s telcos get the chance to put their case for big tech capex contributions; T-Mobile US splashes $304m on more mid-band spectrum; and more!  

Qualcomm and Meta have doubled down on their existing relationship by signing a multi-year agreement to “deliver next-generation platforms and core technologies” based on the chip giant’s Snapdragon XR platforms “to accelerate a fully realised metaverse.” The partnership, which will involve close collaboration between the engineering and product teams of the two companies, was announced by Qualcomm president and CEO, Cristiano Amon (pictured above), and Meta founder and CEO, Mark Zuckerberg, during a keynote presentation at the IFA event in Berlin. “The companies have worked together on cutting-edge virtual reality (VR) innovations for over seven years, most recently with Meta Quest 2, and this agreement solidifies the mutual commitment to deliver multiple generations of premium devices and experiences powered by custom VR platforms in the years to come,” the partners announced in this press release. Zuckerberg noted: “As we continue to build more advanced capabilities and experiences for virtual and augmented reality, it has become more important to build specialised technologies to power our future VR headsets and other devices. Unlike mobile phones, building virtual reality brings novel, multi-dimensional challenges in spatial computing, cost, and form factor. These chipsets will help us keep pushing virtual reality to its limits and deliver awesome experiences.”

The European Commission (EC) has asked telcos to provide evidence that the streaming service giants such as Netflix, Amazon’s Prime Video, Disney +, YouTube et al, should be paying for the carriage of their traffic over the telcos’ networks. The EC is drafting a questionnaire for the network operators as it seeks definitive proof that the volume of streaming traffic has increased profoundly since 2019 and to determine the cost to the telcos of carrying those video streams. Bloomberg reports that it has seen a version of the questionnaire, which also asks the streaming companies to “describe their relationships” with operators and service providers in an effort to determine if there are indications of “market failure” in the sector. The move comes a few months after Margrethe Vestager, Executive Vice President of the European Commission for A Europe Fit for the Digital Age, told reporters in May that a review of potential capex contributions by the online giants was being considered. European Union apparatchiks have often looked at ways regulations could be framed to require streaming companies to pay a “fair share” of the costs incurred by the telcos for carrying their streaming video and other high-bandwidth, data-demanding apps. The idea is that telcos would be required to use the money to improve their own networks. The usual net neutrality/two-speed Internet arguments against any such action are once again likely to be rehearsed. The debate is also throwing into relief the differences in approach being taken by EU member states. For example, Germany and The Netherlands are petitioning the EC to hold its fire until the publication of a report by BEREC (The Body of European Regulators for Electronic Communications) analysing the state of the market and proposing solutions “in due course”, while other members states including France and Italy are pushing the EC to grasp the nettle and immediately draught a definitive proposal to make the streamers pay towards the cost of transmitting their services. As is usual, though, the mills of the European Commission grind exceedingly slowly, and a conclusion will not be ready for publication until early in 2023, at the earliest.

Having already had a busy week, T-Mobile US dominated the FCC’s latest auction, spending just over $304m on more than 7,100 licences for rural mid-band spectrum in the 2.5 GHz band. It was by far the most active company in the auction: The next biggest spender was PTI Pacifica from the US island territory of Guam, which ponied up $17.7m for nine licences. “With most of the available spectrum in the 2.5 GHz band located in rural areas, this auction provides vital spectrum resources to support wireless services in rural communities,” noted the regulator. The FCC said 63 different companies spent $427m in total on 7,872 licences in the auction, with 77% of the winning bidders qualifying as “small businesses or as entities serving rural communities, which will support the introduction of innovative new wireless services in their local communities.” The other two major mobile operators in the US, AT&T and Verizon, do not offer services using the 2.5 GHz band (whereas T-Mobile US already does): AT&T did not win any licences while Verizon did spend about $1.5m on 12 licences using the name Cellco Partnership, though it doesn’t necessarily want them. 

The Competition and Markets Authority (CMA) is concerned that Microsoft’s “anticipated purchase of Activision Blizzard could substantially lessen competition in gaming consoles, multi-game subscription services, and cloud gaming services (game streaming).” Microsoft announced its planned $68.7bn acquisition of the gaming giant in January this year, saying at the time the move would provide “building blocks for the metaverse” as well as make it one of the biggest gaming companies in the world. “Following our Phase 1 investigation, we are concerned that Microsoft could use its control over popular games like Call of Duty and World of Warcraft post-merger to harm rivals, including recent and future rivals in multi-game subscription services and cloud gaming,” noted Sorcha O’Carroll, Senior Director of Mergers at the CMA. “If our current concerns are not addressed, we plan to explore this deal in an in-depth Phase 2 investigation to reach a decision that works in the interests of UK gamers and businesses.” MIcrosoft and Activision Blizzard have five days to respond to the CMA’s concerns before a Phase 2 investigation is instigated. For more on the CMA’s concerns, see this announcement.   

Sticking with the theme… M1, one of the main mobile operators in Singapore, has launched a cloud gaming subscription service called Zolaz. Read more.  

A new report from research house IDC says roaring inflation in the US, the UK and elsewhere in the western world will have a marked effect on the sale of smartphones. It forecasts that this year alone shipments of the devices will fall globally by 6.5% to 1.27 billion units. Even as supply chain problems have eased somewhat, mounting geopolitical tensions and rampant inflation are quickly reducing demand as people decide to hang on to their old phones for another year or so as they struggle with massive increases in the cost of energy and foodstuffs. Nabila Popal, research director of IDC’s Worldwide Mobility and Consumer Devices Trackers, commented, “The supply constraints pulling down on the market since last year have eased and the industry has shifted to a demand-constrained market.” She added, "High inventory in channels and low demand with no signs of immediate recovery has OEMs panicking and cutting their orders drastically.” It’s a very gloomy picture in the short term, but IDC does discern some bright spots in the murk: For example, it forecasts that the market will bounce back next year with 5.2% year-on-year growth. Furthermore, “Despite the unit decline, average selling prices (ASPs) have grown 10% year over year in Q2 and are forecast to grow 6.3% for the full year.” The rich are always with us, and as a result sales of ‘premium segment’ handsets (defined by IDC as those costing US$800 and above) have increased, despite the parlous financial state of much of the planet: Sales of such premium devices currently account for 16% of the total smartphone market and that figure is set to rise. At the cheaper end of the market, markets where devices costing less than $400 comprise much of the sales volume have been particularly hard hit. Smartphone sales in Central and Eastern Europe will be down by 17.4% this year, while in the Asia/Pacific region (excluding Japan and China) previous forecasts of a 3.0% decline have been revised to a 4.5% fall. The biggest drop will be in China, where a decline of 12.5% is predicted. Meanwhile, in North America, the US market will grow by a mere 0.3%, while the Canadian market is set to grow by 3.2%. On the 5G front, global shipments of 5G devices will exhibit a 23.6% increase during the course of 2022. IDC adds that 5G devices are expected to account for 79% of all smartphone unit shipments by 2026.

BSS specialist Tecnotree has landed a multi-million dollar deal with MTN Nigeria for a cloud native BSS system that can support a broad range of services, including those planned for 5G customers, the vendor has announced. The deal is another sign that Tecnotree’s strategy is paying off: Earlier this month it reported revenues of €31.6m for the first half of this year, a 13% year on year increase, and noted that full year revenues are set to be 5% to 10% higher than 2021’s €64.2m. CEO Padma Ravichander noted that, during the first half of this year, the company “continued to receive large orders from large tier 1 telecom groups for which we need to invest to deliver these orders expeditiously. This will ensure long term recurring revenue from these new customers such as STC, Zain, Ooredoo as our engagements have a long-term aspect embedded like MTN and Claro with whom we have more than a decade long relationship and recurring revenues.” 

In the US, a company by the name of Subsea Cloud, which plans to place commercial data centres underwater by the end of this year, has announced the locations of its first three deployments, starting with the installation of a “pod” [Editor’s note: isn’t that what dolphins live in?] close by Port Angeles in Washington State. The first pod is named ‘Jules Verne’. It comprises a waterproof 20-foot shipping container fixed at a depth of 30 feet. It will hold 800 servers in 16 racks. There is a 100 Gbit/s link from the sunken container to the shore. The confusingly named Subsea Cloud (because it evidently is the antithesis of a ‘cloud’ company), claims the datacentre will eventually grow to 100 pods in size. Perhaps Pod Number 2 will be the ‘Captain Nemo’ and the third the ‘Ned Land’ – having a Canadian harpooner around might be handy for keeping one of Jules Verne’s ‘devilfish’ at bay. All of this is a change of approach by Subsea Cloud, which previously had intended to site its kit in the deep oceans at depths of 3,000 metres. The selling point was that it would be very difficult for anyone physically to breach a pod at such immense depths – but it would be equally difficult to swap out a card or a drive. It’s just as well, then, that Subsea Cloud will be an ”underwater landlord”, where equipment is co-located. The company claims that placing a data centre underwater reduces power consumption and lowers carbon dioxide emissions by 40%. It adds that latency too is reduced because the pods can be anchored close to built-up coastal areas and cities. The company’s CEO, Maxie Reynolds, points out that 40% of the world’s population live within 50 miles of a coast and claims that latency can be reduced by 98% and Internet access speeds improved by the careful siting of its pods. He also claims that the submerged data centres cost 90% less to build than do land-based data centres. He commented, “As subsea engineers, we've designed our [centres] to be versatile whilst maintaining its design integrity. The data centre pods will work in shallow depths just as they will at deeper depths. The design ensures that at any depth, the pressure inside the housing is equal to the pressure outside - we make no changes to accommodate different depths because we don't have to.” Subsea Cloud will next deploy the Njord01 pod 800 feet down in the Gulf of Mexico and the Mannanan pod 600 feet under the surface of the North Sea. As for customers, Maxie Reynolds says, "We are in talks with two of the well-known hyperscalers” but that those discussions are “still a little up in the air.” Which is hopefully more than the pods are…
 

- The staff, TelecomTV