THE WRAP: EC gets tough on telcos; Record fine for Telecom NZ

The European Commission dominated proceedings this week with declarations on child protection, mobile networks and net neutrality, while Chinese equipment vendors profited on handset sales.
Research showing a quarter of children aged 9 to 16 years leave social network profiles open to all put operators in the EC’s crosshairs. The Commission called for urgent action to protect young users from “groomers and stalkers,” and hinted a voluntary code of conduct signed by several leading firms could be toughened up.
The EC wasted no time in turning its attention to national telecoms regulators, giving them until the end of the year to incorporate new radio harmonization rules into domestic regulations.
ISPs were also in the firing line, with the EC setting communications regulator BEREC on the case to ensure net neutrality rules are properly implemented. The EC wants to know if ISPs prevent users switching provider, tinker with or block access to content, and use misleading data rates in adverts.
Operator’s should hope the EC doesn’t draw inspiration from New Zealand, after incumbent Telecom NZ was slapped with a record NZ$12 million (€6.5 million) fine for overcharging on wholesale access between 2001 and 2004. A judge said the fraud was deliberate and “sanctioned at the highest levels.”
Chinese vendor Huawei detailed an aggressive push into the enterprise and device sectors, as it bids to sustain momentum that saw it grow profit 30% to 23.8 billion yuan (€2.5 billion)in 2010.
The firm is restructuring into four business units covering carrier network, enterprise, devices and ‘other’, with the heads of each division reporting directly to founder and CEO Ren Zhengfei. A staffer told Telecoms the enterprise unit will focus on industries including “e-Government, finance, energy, education and retail.”
Rival ZTE also fared well on the back of strong device sales, with 1Q profit up 15.9% to 127 million yuan, however revenue from its network equipment business barely increased and sales of telecom software and services fell.
Ericsson vowed to continue fighting to block the award of a 16.29 billion baht (€376 million) 3G expansion contract for Thai operator TOT to a rival consortium. Co-litigant ZTE prompted speculation of a behind closed doors agreement with the carrier by dropping its court petition.
European fiber network operator Interoute reported its first profit, with EBITDA up 46% to €58 million in 2010 on strong demand for unified and cloud computing services. Revenues grew 10% to €295 million.
It was a tough first quarter for Sony Ericsson, with supply chain problems and lower device shipments contributing to a near 50% fall in profits year on year. The figure fell from €21 million in 1Q10 to €11 million in the recent quarter, as device shipments declined 2.4 million to 8.1 million units.
Yahoo also had a tough start to 2011, with net income down 28% to $223 million (€153 million), on revenues of $1 billion.
In stark contrast, Apple reported a 95% increase in quarterly profit in calendar 1Q – the firm’s fiscal 2Q -, from a near-doubling of iPhone sales.
M1, Singapore’s smallest cellco, grew profits 8.2% to S$42.5 million (€23.6 million) in 1Q11, despite a marginal 1.6% rise in service revenues.
Microsoft scored its second cloud syndication partnership in Asia Pacific, signing up M1’s rival StarHub to its Office 365 cloud productivity suite. The service pitches StarHub in direct competition with SingTel in the enterprise market, and complements an existing deal Microsoft holds with Australia’s Telstra.
The Philippines also hosted a head-to-head battle with Globe Telecom and Smart Communications lighting rival 4G networks on the same weekend.
Informa analyst Thomas Wehmeier said a procurement joint venture between France Telecom and Deutsche Telekom is a sign of market maturity, and predicted other European telcos will follow suit.
And Ronny Haraldsvik, vice president of marketing at Bytemobile, revealed operators aren’t ready for a rapid rise in mobile video consumption. He told Telecoms video could account for 66% of all mobile data traffic by end-2012 – some three years earlier than predicted.