4G licences only raise £2.34 billion in auction

It beggars belief that the UK Government has only managed to raise just £2.34 bn in licence fees for the the 4G licences.  It really does suggest that both the UK Government and Ofcom are totally disconnected either from the potential of the mobile internet market or they are totally incompetent at running an auction.  Whilst it was clear from the start that the market would not pay the astronomical figures paid for the original 3G licences of £21 billion raised by Gordon Brown,  the value of these licences should have achieved far beyond the Office of Budget Responsibilities own projection of £3.5bn, let alone the £2,34bn delivered.  Everything Everywhere, Hutchison 3G UK, Telefonica (O2), Vodafone (VOD) and BT (BT.A)'s Niche Spectrum Ventures secured the 4G licences.  It is a little disappointing that the winning bids all came from the usual suspects and that we will not see any new entrant to spice up the cosy market carve up between the major mobile networks and BT.


Given that the UK is one the largest mobile internet markets and combined with the superior quality of coverage and speed of performance offered by 4G’s 800 MHz network, the winning network providers and service providers stand to make significant revenue.  The mobile broadband should provide smartphone and tablet computer users with "superfast" download speeds, and will provide £20 billion of benefits for UK consumers over the next ten years, Ofcom said. 

However, when mobile operator EE, a joint venture between T-Mobile and Orange, became the first to launch a 4G service in October 2012 in a brief monopoly, it struggled to attract users. It was forced to cut its prices in January, lowering its entry price to £31 from £36 a month.

Despite this slow take up, I still believe that 4G has the power to become the de facto communications network for Internet access in the UK - a view clearly shared by BT - which is why they entered the auction to secure 4G capacity which they are using to extend their WiFi network.  4G has the capacity to be a game changer in technology terms and could change the local access in remote locations of 100 MHz Ethernet speed access reducing the need to take fibre to the home.

There may not be champagne corks popping in No 11 tonight, but I am sure they will be in the HQs of our major mobile providers.

Sky and Virgin slam BBC on Canvas platform project

As I reported last month, the BBC was quick to introduce Project Canvas to replace the now defunct Kangaroo Project.  Now both Sky and Virgin have slammed the proposals.

In a robust response to the interim report from the government on Digital Britain, British Sky Broadcasting says that the plan by the BBC to set technical standards and develop new platforms for broadband video services raises concerns. Virgin Media has also raised specific questions in its response, calling for “regulatory scrutiny” of the implications for competition.

In its published response, Sky says “the suggestion that the BBC should become involved in driving broadband take-up by setting technical standards and developing new platforms raises concerns. As well as the potential for market distortion and illegal state aid, it sets a dangerous precedent and risks distracting the BBC from its core purpose, which is to invest in public service content and to make it widely available to licence fee payers on whichever platforms and services they choose to use.”

The response observes that “The most appropriate role for the BBC in encouraging broadband take-up is to make its content widely available on as many platforms as possible.” It says the core purpose of the BBC is to create public service programming and to make it as widely available and easily accessible as possible, to allow licence payers to access it on whichever platforms and services they choose to use.

“The BBC should not favour one particular platform or technology over another, and should be scrupulously ‘platform neutral’ both in the way in which it makes its content available to different services and in the way it promotes its availability to viewers.”

Sky says that based on previous experience it is concerned about the potential of the BBC “to distort the market by favouring its own distribution platforms and technologies over their competitors”. It observes that this raises potential competition and state aid issues.

The BBC was one of the partners in a joint venture video on demand initiative known as Project Kangaroo that was scrapped after being blocked by the Competition Commission earlier this year.

Sky argues that while claiming to adhere to the principle of platform neutrality, the BBC has for many years promoted the availability of its digital channels to favour Freeview over satellite and cable.

“We are concerned that the BBC is similarly intent on favouring its iPlayer service: through its extensive marketing and promotion; its proposal to entrench further the underlying technology platform by licensing it to other PSBs; and by its unwillingness to supply BBC content to competing on-demand video services like Sky Player,” said Sky.

Programming from the BBC iPlayer is currently only available as a link to the BBC web site from the Sky Player service.

“The BBC’s ‘Canvas’ proposals, currently being consulted on by the BBC Trust, potentially raise similar concerns,” in the view of Sky.

The BBC Trust says that “Canvas will offer a standards based open environment” that is open to anyone that adopts and uses its specifications, which will be “substantially based on standards used within the internet and broadcast industries.”

So far there have been no technical details on these standards or the terms on which they will be made available, for instance to other platforms like Sky, should they wish to use them.

Sky is urging the government to define more clearly the role of the BBC in driving digital and broadband take-up. It observes “The most positive contribution the BBC can make — and one that is entirely consistent with its core purpose — is to distribute its content as widely as possible and promote its availability to viewers in a way that is platform and service provider neutral.”

Clearly Sky has its own agenda to promote, but it is difficult to argue with this logic. While the BBC has promoted Freeview and Freesat as free to view alternatives to satellite and cable television platforms, it also has a responsibility to the majority of digital television homes that have chosen a pay television service.

For its part, Virgin Media, which currently carries a version of the iPlayer service on its cable television platform, has welcomed the intervention of the Competition Commission in the aborted Kangaroo venture. It said “It is important that any future initiatives involving an aggregation of this strategically critical content receive equally rigorous scrutiny.”

Virgin Media said it “notes with interest the BBC’s recent Canvas proposals to create a set of technical standards and, it is suggested, a common user interface for the IP delivery of on-demand programming to the TV.”

“While Virgin Media acknowledges the potential consumer appeal of this proposal, it is not yet clear how the BBC and its partners propose to address critical elements of the service,” it said.

Specifically, it said that it is important that the standards are compatible with cable, as well as satellite and terrestrial television platforms, noting “It is not currently clear whether or not this is envisaged.”

Virgin said the initiative should not “develop in a way that gives the BBC and its partners control, or the ability to exert undue control, over a standardized universal interface.”

The cable company said it is important that “Any such technical delivery mechanism does not become an interface or exclusive ‘gateway’” to catch-up and archive programming from public service broadcasters.

“On the contrary,” Virgin Media observed, “any such content delivered through such an interface should be made available to competing platforms on fair and nondiscriminatory terms.”

In addition to “a rigorous and objective assessment of its impact on other operators and the market as a whole” from the BBC Trust, Virgin Media said it “would welcome wider regulatory scrutiny of the potential implications of Canvas for competition.”

With Canvas, the BBC has the opportunity to lead and involve the industry in creating a genuinely open cross-platform specification for broadband video services that will benefit the market in general.

The responses from Sky and Virgin Media suggest that unless it involves the wider industry, the BBC Canvas project could well face the same competition concerns that killed Kangaroo.

In my view the BBC has no role in spending licencees money in an area which is clearly the domain of the IPTV industry developers.

Project Canvas leaps in to replace Kangaroo!

Project Canvas, the venture between BBC, ITV and BT to "bring catch-up from the PC to the TV", will cost the partners £24m to get up and running.   A fourth major partner, possibly Channel 4, Channel Five or a major internet service provider is expected to come on board in the near future.

The costs are intended to be shared equally and BBC has indicated that their share will be £6m of licence payers funding. 

The venture's backers aim to provide an open technology offering so that viewers with Freeview or Freesat and a broadband connection can access catch-up and on-demand programming via their TV from online services such as BBC iPlayer and ITV Player.

The BBC anticipates that these new web-enabled set-top boxes will cost somewhere in the region of £100 to £200, and that the catch-up television service will be delivered via the internet. The BBC, ITV and BT believe a sufficiently good service could be achieved with a relatively low speed internet connection of around 1.6 Mb, and other internet service providers are expected to back the scheme.

“We are excited about what this could mean for the viewing public,” Erik Huggers, director of future media and technology at the BBC, told The Times. “While audience demand for high-quality public service broadcasting remains high, the ability of the commercial operators to deliver is seriously threatened by a changing media landscape and the difficult economic climate. Innovation is in the BBC’s DNA, and with our funding model and great content, we’re in a unique position to innovate for the benefit of everyone.”

Earlier this month, a proposed catch-up TV service backed by the ITV, Channel 4 and BBC, was blocked by the Competition Commission. The Commission ruled that Project Kangaroo, the online television venture between ITV, Channel 4 and BBC Worldwide, was blocked by the Competition Commission this month on the grounds that it would stifle the video-on-demand market, so the trio insist that Canvas will be open to any content provider that meets technical parameters. For that reason, those involved with the project are careful to label it as “Freeview mark two; not Project Kangaroo mark two”.  Although I suspect it is the same team behind Canvas that was behind Kangaroo.

The team behind Project Canvas has stressed that other content providers, such as film rental services, would be welcome to offer their services through the platform, as long as they meet the necessary technical standards required.

Some television viewers are already able to watch shows from BBC iPlayer on their TV. Virgin Media offers BBC iPlayer to its 3.7 million subscribers, and this audience accounts for 30 per cent of all viewing requests logged by iPlayer.

Anyone who has tried to watch the iPlayer or any video content online at less than 2Mb will find the suggestion that, 1.6 Mb broadband accesses will be sufficient to support an adequate service to be quite amusing.

In addition, why is it going to cost £24 million to develop an iPlayer for a TV set-top box, when the likes of Sony and Pace not to mention Virgin have capability developed?  Agreeing open access standards for their content to be run on set-top boxes should not cost so much and there are enough set-top manufacturers who are ready to work with such a standard and build it into their equipment.  I recall from a recent Internet/TV project that the BBC frequently changed their iPlayer format to frustrate software developers trying to develop set-top box developments to deliver the iPlayer.

The BBC Trust, the corporation’s governing body, yesterday opened a consultation on the proposals, and will make a decision on the project by the end of July.

Facebook could damage your wealth!

The growth of social networks such as Facebook, MySpace and Bebo has been extraordinary and represents the one of the defining services of the Web 2.0 user driven internet. With an estimated 500 million plus members of social networking sites and driving an estimated 8% of worldwide web traffic, the sector is clearly a major driver of web activity.

However, if you thought your MySpace or Facebook page is just a bit of fun and a great way to stay in touch with your friends, you also need to be aware of the far reaching aspects of the information that you place in your profile will have on other aspects of your life. Particularly these days, as it is possible for employers to check peoples profiles to get a better idea of the individual they might be taking on and if they see something they don’t like in your personal life it may cast a shadow over your professional life. For example, I know of a colleague who was interviewing for a nanny for her child and checked them out on Facebook. Whereas from the interview, the young lady seemed like the perfect candidate, her Facebook profile revealed a whole other side of her lifestyle that wasn’t particularly compatible with the type of person that anyone might want looking after their child. This maybe one of the more trivial examples, however, a more serious one was a recent case reported on the BBC website. A senior police officer lost out on the chance to become a Chief Inspector after he was found to have posted very personal information on the internet. The revealing information on his Facebook account was considered to have been very damaging due to his profession and resulted in him losing the opportunity to be considered for promotion.

So next time you are posting up those photos of the riotous night out, just take a minute to consider what your employer may think of the picture of you in a less than complimentary position.

Friends Disunited! Breaking up is so expensive……

It was reported in the weekend papers that ITV is to sell Friends Reunited.  ITV bought Friends Reunited back in December 2005 for an eye-watering £175 million ($280 million).  According to the story in the Sunday Telegraph, “Analysts believe that Friends Reunited is now worth significantly less because of intense competition from rivals such as MySpace and Facebook” or just maybe they overpaid in the first place.  Back in 2003, one of the major accountancy firms, BDO Stoy Hayward, was looking for a buyer on behalf of the original founders Steve and Julie Pankhurst and co-founder Jason Porter.  I was asked by a client to review the business and come up with a valuation.  The business was hugely profitable although there was obviously need for significant investment in their infrastructure.  However, the most “toppy” valuation I could come up with was in the region of £30 million which was higher than market sentiment suggesting a £25 million price tag.  In the event, Friends Reunited decided not to sell and brought in former Financial Times chief Michael Murphy as part of a global expansion plan.

This was a phenomenally successful move since Murphy increased the business’ valuation from £30 million to £175 million in just over two years.  The spirit of 1999 seemed to be in the air again!  Heady days indeed and at the time ITV said that the Friends’ team would have a leading role in developing ITV’s online and broadband strategy.

Sadly it hasn’t worked out as everyone had expected and yet another smart internet business failed to develop into a major force within the big company corporate world of ITV.  Now ITV will pay the price in what is likely to be a fire sale of the asset at a knock down price.  I wouldn’t be surprised to see Steve and Julie Pankhurst looking to use the money ITV paid them to buy back the company for a much lower figure.

I wonder whether ITV is still using the same analysts that thought £175 million was a good deal!  Well it would seem they maybe since today ITV is suggesting that the downturn in TV advertising revenues is temporary and is just down to the deepening recession.  Sadly anyone who follows new media with more than a passing interest will know that Google had their lunch last year and recession or not I just don’t see the Internet juggernaut altering course from taking a greater share of the converging TV and Internet advertising markets.

However, one potential future of TV lies not in traditional broadcast, but in the selective world of view-on-demand via the broadband Internet and content will be the key to its success.  Whilst we are all happy to catch an amusing 30 second clip of a cat flushing a toilet on YouTube, it is hardly compulsive viewing and unlikely to attract advertisers.  In reality, view-on-demand of quality content available at the user’s convenience is an attractive offering and one ITV is well placed to deliver.  ITV is content rich with access to a significant back catalogue and a continuing, although diminishing, commitment to developing new content.  Content will make Internet TV and IPTV fly.  As for the advertising model that is evolving for video content such as pre-rollers and mid rollers etc, the pricing level will be fundamental different from the millions of pounds once paid for a 30 second slot during Coronation Street and far closer to the Internet pricing model.

So as traditional broadcast advertising continues to decline, ITV must act quickly to build a content rich Internet based future.  The recent Kangaroo controversy is just a side show and quite frankly a waste of money for ITV as I believe was the development of the iPlayer a waste of licence payers money when there exists many fully developed home grown alternatives such as Vividas.  ITV should use some of the funds they get for selling Friends Reunited to look to develop content in collaboration with some of the current alternative Internet TV channels such as Joost, Blinkx or even Wii TV.  ITV could get into these areas with a much lower level of investment than the grand gestures of 2005 and they have the potential to offer a much more interesting future than managing decline!

Is Watching TV on Your Mobile Worthwhile?

With 3G now the de-facto standard across a whole range of mobile phones, one of the apparently most attractive applications is broadcast IPTV. It is now possible to watch the range of BBC content and Sky content over the mobile networks. The only problem is likely to be your download limit which could make “free” TV seem very expensive.

BBC iPlayer is available on the Nokia's N96 and it is possible to use your iPhone or iPod Touch to pick up the latest BBC re-runs. The BBC is aiming to deliver TV to an increasing number of mobile devices. Take a look at Freebe TV and you will find a incredible range of TV that can be viewed on you mobile. So there is no shortage of content and it is increasing daily.

However, is watching TV a realistic option on your mobile. The largest mobile screens tend to be limited to a maximum of 12 cm by 6 cm or about the same size as a packet of 20! This is considerably smaller that most portable DVD players. Sport has been one the most promoted services particular football, but it does tend to turn into a video version of that old standby the “Spot the Ball” competition.

Using Laptops terminals such as the latest Sony Vaio Z Series or the ASUS EEE PC to access TV is fairly accessible, but watching a 2 inch square screen is a very different proposition.

Maybe the way to go is to use a “Personal Media Viewer” from Myvu or Vuzix, which offers both a stylish way to watch TV and a “big screen” effect. The glasses are still an expensive add on to your iPhone or Nokia from £100 to £250, but from my perspective it is the only way to go to get an enjoyable experience. The effect is to appear you are watching the equivalent of a 44 inch wide screen TV. The most expensive devices allow you to look through the screen to be aware of what is going on around you. It will come as no surprise to learn that these devices have evolved from the military industry.  

I suspect that Mobile TV is probably unstoppable, but it will be largely a gimmick unless you get a pair of personal media glasses!