Mobile spectrum bonanza
The impasse between the federal government and mobile carriers over the renewal of wireless spectrum licenses is over and by the looks of things Canberra has managed to get the $3 billion outcome it was seeking.
The dispute was centred on the amount of money the likes of Telstra, Vodafone Hutchinson Australia and Optus were being asked to pay for continued access to the spectrum and the two years of pricing negotiations had all the usual sabre rattling.
Communications minister Stephen Conroy took a very stern position on the issue, telling the telcos to pay up or face the prospect of foreign carriers muscling into their territory thanks to a public auction of the spectrum. That line really didn’t soften much despite the warnings from the telcos, notably Telstra, that the push for exorbitant charges would lead to higher prices for customers and hamper the mobile growth story in Australia.
As it turns out, Conroy and the telcos have managed to resolve their differences and while there has been a slight decrease in the price tag for the telcos the government’s budget bottom line is looking mighty healthy.
The pricing boils down to about $1.23 a megahertz per person, which is lower than the $1.46 the government was initially seeking and Telstra is now expected to pay about $1.2 billion over the next four years, while Vodafone will fork out $1.5 billion.
However, as Ovum analyst Nicole McCormick points out, the government hasn’t really given the mobile operators much of a financial reprieve.
"The government has reduced 800MHz spectrum renewal costs for Telstra and Vodafone, but with the industry having to find an estimated more than $3 billion collectively for mobile re-licensing, the government’s agenda is clear: maximise revenue from renewals and spectrum auctions.”
Telstra’s hasn’t immediately made clear that it will seek to renew all of its 800MHz, 1800MHz and 2GHz spectrum licenses, but given the increasing importance of the mobile business the telco is unlikely to rock the boat. Vodafone has already committed to paying the $1.5 billion which isn’t surprising given how badly it needs to reconnect with its customers.
All eyes on November auction
The deal now paves the way for the November auction for additional spectrum that could deliver another $4 billion to the government coffers.
Conroy has laid out the parameters that should ensure a competitive process and you can bet your bottom dollar that all three big carriers will be keen to duke it out for a piece of the 4G action. What’s interesting is that the limits that disallow a single mobile provider to hold more than two 20 MHz blocks in the 700 MHz band and two 40 MHz blocks in the less valuable 2.5 GHz band are clearly designed to facilitate the entry of a new interested party.
Just who that fourth party will be is anybody’s guess but as iTnews’ James Hutchinson points out, one intriguing contender could be Google. There is very little doubt that the top three operators will fight tooth and nail for the extra spectrum on offer. Despite the concerns, Vodafone won’t lie down quietly at this auction and the potential entry of Google could make this a very intriguing bidding war. As for the government, it’s no doubt looking forward to counting the cash.
David Jones, IBM
David Jones has finally taken a decisive step forward into the world of online retail, signing up IBM to deploy its cross-channel retail platform. The multi-million dollar deal will see IBM Smarter Commerce become the engine that will power David Jones’ online push. After a lengthy 18 month selection process DJs will be hoping that the integration of the platform, which is designed to give customers greater flexibility in terms of how they shop at and engage with the retailer, is done as quickly as possible.
One can argue that Australia’s traditional retail heavyweights have been slow off the mark in picking up the recent shifts in consumer behaviour and an online platform is the critical piece of infrastructure that lets a retailer engage with today’s empowered consumers, who want more choices and full price transparency at their fingertips.
"This platform could be the thing that lets David Jones address those needs of the smarter consumer,” says IBM lead for retail and consumer products in Australia, Ian Wong, who adds that flexibility is the key to winning the hearts and minds of customers.
Another important factor, according to Wong, is leveraging the traditional brand dominance of traditional retailers and their existing physical infrastructure to build a cohesive multi-channel strategy.
"What we are seeing is David Jones marrying the best of the old world with the best of the new world,” Wong says. The first phase of the solution will be rolled out in the second half of this year, with the following phase expected to go live in 2013.
Quickflix, HBO, Samsung Electronics
Australian IPTV and DVD rental by post company Quickflix has had a blockbuster week when it comes to deals, with US heavyweight HBO coming in as a strategic investor and Samsung Australia sealing a partnership to allow its users to stream Quickflix’s content to selected devices.
The entry of HBO, source of popular shows like The Wire and Deadwood, as a strategic investor, is a real show of faith in the Australian company, which has been slowly picking up steam.
It’s been a remarkable journey for Quickflix founder and chairman Stephen Langsford since the company picked up its rival BigPond’s customer base of 40,000 in July. The company has signed up content deals with the likes of NBC Universal, Sony Pictures Television, Warner Bros. International Branded Services, etc. Meanwhile, there’s also been a steady flow of streaming deals with the likes of Sony.
According to Langsford, the BigPond deal was a real catalyst for Quickflix to cement its place in the market and start branching out into the streaming business.
Delivering DVDs to mail is still Quickflix’s bread and butter although the prospects of its Watch Now streaming offering, launched in October, will only be enhanced with the latest deal with Samsung. Langsford is still bullish about DVDs by mail, saying that the business still has a future.
"DVDs are a one and a half billion dollar business in Australia (physical sales and rentals) and you are seeing the acceleration of in store closures because of the retail squeeze with the higher rent and labour costs,” says Langsford.
"What’s happening is that retail stores are closing and with the unmet demand consumers will keep coming to services like Quickflix.”
So the retail blues are for the moment helping Quickflix and while Langsford reckons that the mail order side of the business is still going to be the key driver, he is under no illusions that the future lies in streaming content. Dial a DVD isn’t the normal way of doing things just yet in Australia but it might not be that long before it makes DVDs by mail a thing of the past.
Online accounting software company Xero has welcomed another former MYOB exec into its list of top 20 shareholders, with MYOB co-founder Brad Shofer joining fellow founder Craig Winkler on the list.
Following a $15.5 million private placement last week, Xero facilitated on and off-market trades totalling $3.8 million after being approached by institutions and strategic investors wishing to invest. The shares were transferred at $2.15 - the same price as the strategic placement.
Investors from five institutions were involved in the trades, including US based Sophrosyne Capital LLC and Matrix Capital Management.
Computershare has completed a $550 million acquisition of Bank of New York Mellon’s US share-owner services business and has won the rights to be the transfer agent for Facebook’s blockbuster $US5 billion float.
Primus Telecom has won a contract from energy retailer Australian Power & Gas to provide an Australia-wide voice and data network. The independent energy retailer said that Primus’ solution will potentially reduce the energy retailer's overall telecommunications costs by 30 per cent, as well as improve the efficiency and speed of its WAN as it consolidates its data centre operations.
The Primus deployment will include a national voice network; a Primus Inbound Intelligent Network for all 1300 and 1800 services; and a Primus Private IP Network to connect its two offices and two data centres in Melbourne and Sydney.