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Vocus is preparing its New Zealand assets, which include mobile, broadband, and energy offerings, for sale by June 2018, while also exploring the sale of its ‘non-core Australian assets’ including datacentres.

Source: Vocus to sell New Zealand assets | ZDNet

The Australian parent is in trouble. As is so often the case, the people at the top decides to get rid of the New Zealand operation. After years of telling us otherwise, Vocus New Zealand is suddenly “non-core”.

Vocus New Zealand has been performing well. If anything it has done better than the Australian business.

The company’s annual report to shareholders shows the facts:

  • New Zealand revenue up 123 percent.
  • The consumer business is up 186 percent.
  • EBITDA up 103 percent in NZ dollars.
  • Average broadband revenue per customer is $71.
  • In the most recent quarter Vocus NZ had an 18 percent share of new UFB connections. That’s punching way above its weight.

Where are the buyers?

The problem for the Australian parent is there is not a conga-line of potential buyers waiting to snap up New Zealand telecommunications assets. That is, as always, except at fire sale prices.

It’s possible parts of Vocus might find willing buyers. Taken as a whole it is most likely too big for a single NZ telecommunications industry player to swallow whole. We’ve seen  the problem Vodafone had absorbing Telstra-Clear. 2degrees did a fine job integrating Snap. But that deal was at least an order of magnitude smaller.

Vocus is New Zealand’s fourth largest retail telco. It comes in behind Spark, Vodafone and 2degrees.

If the stories about a pending IPO are correct, you can rule out Vodafone as a buyer. Spark and 2degrees are also unlikely buyers, for different reasons. Although all three might like to rip juicy morsels from the carcass.

There may be regulatory reasons why none of the three bigger retail telcos would want Vocus.

Vocus New Zealand options

Which leaves three plausible options. The first is that the parent company has a big overseas buyer in mind. At times like these China often gets mentioned. Maybe that’s a possibility. We know Chinese telecommunications executives have been window shopping in New Zealand in recent years.

A second option is for a private equity buyer to pick up the business. It can’t be ruled out, but Vocus New Zealand was already in the process of applying something similar to the kind of rationalisation private equity firms apply.

The other possibility is some form of management buyout. Of course, these three alternatives are not mutually exclusive. And there is some smart telco investment money in the country. At least some of that will be from those who cashed out during the last five years of industry consolidation.

One thing is likely, the parent company might struggle to get back all it has invested in Vocus New Zealand.

The New Zealand telco sector has barely stopped to catch its breath since the government stepped-in with its nationwide ultrafast fibre programme started. That triggered a wave of merger and acquisition activity which is not over yet. It’s likely to be a busy year for the industry.

Vocus New Zealand on the block as Aussies bail was first posted at billbennett.co.nz.

Vodafone TVYou need a fast fibre connection to use the new-look Vodafone TV. Less than 100Mbps won’t cut it. That means a UFB connection or Vodafone’s own FibreX alternative.

You also need a Vodafone broadband account. The service is company exclusive. CEO Russell Stanners says he hopes customers who like the look of Vodafone TV will reward his company with their business.

Vodafone has offered a TV service for some time. Its 2013 earlier incarnation was, in effect, a version of Sky TV’s My Box reworked for the internet.

The new version is something else. The hardware is a puck-sized box packaged with a remote control. In some ways it is like Apple TV.

It’s not about the hardware

There’s not much to the hardware because there doesn’t need to be much. The cloud does all the heavy lifting. An Amazon server stores all TV shows, movies and other video. It could be in Australia, but it could be anywhere in the world.

Cloud storage has the vast catalogue of material and the user’s own saved program choices.

There are also mobile clients for phones and tablets. Stanners says, you might be sitting at home watching the All Blacks test on a large screen before going on a trip.

When your taxi arrives, you can press pause on the big display. Load yourself in the car and resume watching the game from the point where you stopped en route to the airport. Pause again, dump your bags and find a seat in the lounge before getting back to watching the game on your tablet.

Stanners says the experience is seamless and brings all the screens together. Vodafone wasn’t able to show the hand-off at the Auckland event to show off the product. Yet staff were able to show how well Vodafone TV works on big screens and on mobiles. It is impressive and like all impressive technology has a faint whiff of magic about it.

Reverse electronic programme guide

Using the cloud has other advantages. There’s no likelihood of running out of local storage. And there’s a powerful reverse electronic programme guide.

This makes it easy to find the shows you want. One neat twist is you can use your mobile phone to cue big screen content. It’s a form of on-demand programming. Armed with the reverse programme guide, you can search back through the last week or so to find shows that you may have missed. The actual timespan wasn’t discussed.

Vodafone TV uses the company’s proprietary intellectual property. The company has a similar product in parts of Europe. Stanners says there has been a huge amount of local input into the service on sale here. Not least, is the work clearing the rights with content owners to build the reverse electronic programme guide.

Vodafone TV: made for Sky merger

The TV-as-a-service product was already in the pipeline when Vodafone planned to merge with Sky. It shows what Vodafone was able to bring to the party. Sky, meanwhile, owns the bulk of content. It will all be there on Vodafone TV, but it’s isn’t an exclusive relationship. The device is able to run apps and from day one there will be Netflix, YouTube and content from Mediaworks. TVNZ will join them soon after.

Vodafone was coy about the precise launch date and the cost. Stanners says it will be soon. There was a whisper at the event that soon means the next week or two. We could have the new Vodafone TV before we have a government.

He wouldn’t talk prices, but Stanners says they will be competitive. Again, the word around the event is that it won’t be expensive. There will be add-ons, some premium content and extras like Netflix subscriptions. At this stage customers will have to buy Netflix themselves, but Vodafone may yet offer it.

Party-on dudes

It doesn’t stop there. Stanners says one advantage of Vodafone’s approach is it makes distribution easy for smaller content providers. He says that means we could see the emergence of Wayne’s World-like niche channels.

The event made it clear there is still a strong relationship between Vodafone and Sky. Vodafone TV delivers most of what a merged operation could have achieved. It does so without causing regulatory ripples. There is no legal compulsion for Sky to offer the same content to other broadband suppliers.

Vodafone TV puts the company in a strong competitive position. It should be able to grow its share of the broadband market. Yet even with stellar growth it will struggle to match Sky’s satellite reach. It goes places fibre doesn’t.

Fibre is important to Vodafone TV. You need a solid, fast, reliable connection for it to work.

Chorus and the other fibre companies have graphs that show how fibre uptake took-off. It happened first when Spark introduced Lightbox. Then, again, when Netflix opened in New Zealand. There were two clear inflection points.

Inflection point

It wasn’t only uptake. The graphs also showing how much data users download. These also turned corners at the inflection moments. Expect a similar effect as Vodafone TV kicks in.

Close Vodafone watchers may have spotted a theme with the company in recent months. Vodafone group product director Sally Fuller was in town earlier this year. The main thrust of her presentation was that we’re moving to: “Everything-as-a-service”. She says the ownership of things is on the way out, instead we buy outcomes.

This is something you could miss in Vodafone’s TV announcement. Yes, it is a flash new product. It has the capacity to delight customers and win business from rivals.

At the same time it is another step closer to “everything-as-a-service”. This is the future world Vodafone refers to in its advertising. Vodafone TV is more than a product, it is a strategy.

Vodafone TV — television in the cloud was first posted at billbennett.co.nz.

nokia 8 showing Zeiss lensA decade ago Nokia accounted for almost half the mobile phones in use. Within a handful of years it was irrelevant.

Today Nokia is back. Sort of. A little-known Finnish company called HMD Global has the name rights. HMD sells four Nokia models; the Nokia 3, 5, 6 and 8. Not much imagination went into those names.

The 3, 5 and 6 models are low-end Android phones. The Nokia 8 is the flagship, although at NZ$1000 it is up against other phone makers’ mid-range handsets.

Cameras, bothies

Nokia’s marketing makes much of the 8’s camera. The phone has one differentiating hardware feature that makes it stand out from the pack.

It can take pictures with the front and rear cameras at the same time. Nokia calls this ability the ‘bothie’. Yuck, more awful try-hard-to-be-cute-but-fail jargon.

No doubt the bothies feature will entrance some users. Others will see it as a gimmick.

Camera’s were always a big deal with the Nokia Lumia phones that used Microsoft Windows. Nokia’s problem is that every other phone maker also thinks flagship handset cameras are a big deal.

Zeiss inside

HMD worked with Carl Zeiss to develop the Nokia 8 cameras. Nokia worked with the same company for the Lumia phones.

There are two 13 megapixel camera sensors on the back of the phone. One shoots colour, the other monochrome. We’ve seen this before on the Huawei P10. There’s a two-colour flash and the aperture is f/2.0.

If you’re feeling arty, you can take monochrome shots. There’s also a bokeh mode, which is run of the mill on today’s phones.

The same 13MP colour sensor is on the front of the phone. Unlike most front facing cameras this one includes auto-focus. If you think this sounds familiar, we’ve seen it before on the Samsung S8. The Nokia 8 version is a little more polished, but we’re talking nuances here, not a great leap forward.

This is what delivers the ‘bothie’. Nokia’s marketing says the both allows you to tell the whole story. That is you can take photos and videos of yourself while also shooting whatever is on front of you.

Side by side

When using bothie mode, the two images appear side-by-side on the phone’s screen. In practice it’s isn’t easy to use. Using bothies is more work than most people like.

That’s not to say you can’t use this feature. Most buyers will try it once or twice then park it for later, which could mean never. The camera software doesn’t help. There are few settings for more advanced users. That’s strange because advanced users are the ones who will want to get to grips with the hardware.

On the plus side, the Nokia 8 has good quality sound recording. The marketing material refers to Nokia Ozo spatial 360 audio. Whatever that is. There are three built-in microphones. In theory you can add external ones, although I never found out how this works.

In practice you can record reasonable video of yourself with the front camera and microphones. I can see how that might work for me as a journalist if I wanted to do an on-the-spot report direct to-camera. It would work for someone making a video journal.

Nokia difference?

If HMD thinks the ‘bothie’ and the camera are different enough from what you find on rival premium smartphones, then good luck with that. In practice you can’t do much that you couldn’t do almost as well, even easier on a Samsung S series phone. Or on an iPhone. No doubt some people will master the Nokia technology and do wondrous things. Nine out of ten buyers won’t get close.

Nokia 8HMD has a much sounder and practical point of difference with the Nokia 8 software. This may sound contradictory when I tell you that HMD has, more or less, left Android alone. Most of the time you get a pure Android experience. There are no annoying overlays.

That in itself is a positive. There is an even more important reason for liking HMD’s hands-off approach to Android. It means you’ll get regular software updates.

This is a nightmare with most Android phones. Usually important software updates are late or never come at all. Apart from anything else, it means phones can become insecure. Not updating bugs and other flaws is dreadful, disrespectful customer service.

For this reason alone, the Nokia 8 is a good idea for anyone who wants a phone that is a serious work tool.

Nokia 8 is pure Android

But, as they say in advertisements, there’s more. The pure Android experience is better than you might think. If you’ve spent the last few years with TouchWiz, Emui or another overlay, it is a treat. There is no bloatware.

I was going to say there’s no rubbish software. But that’s not true. During the review pop-up messages asked me to rate the phone out of so many stars. There’s enough of that passive-aggressive nonsense from second-rate apps.

This undermines, but doesn’t invalidate, the pure Android claims. It is enough to put me off the new Nokia. You may feel otherwise.

Look, feel, hardware

The Nokia 8 looks and feels nice enough. It’s faintly retro, we’re talking two or three years here, not a throwback to Nokia’s glory days. Although if you are nostalgic for that, you can use the famous Nokia ring tone.

HMD hasn’t gone for the curved screen used by Samsung. Nor will you find the near zero bezels popular elsewhere. The camera lens does have a bump, but it’s not asymmetric like on the iPhones.

Ring tone aside, you won’t turn heads with the Nokia 8. It looks like a generic phone. The phone feels fine. It is light and thin in the hand. The review model is in a polished dark blue case. It isn’t water proof. The fingerprint sensor sits below the screen, which suits most people.

Nokia 8 verdict

HMD position the Nokia 8 as a premium Android phone. Yet it is well behind the best from rivals like Samsung, Huawei and Sony. It’s not a patch on this year’s or last year’s iPhones either.

It looks and feels more like a premium phone than most mid-range models. That is until you start using it. It’s a good phone, not a great one.

Which means it is another mid-range phone although prettier than most. Even so, at NZ$1000, it is one of the most expensive mid-range phones around. At NZ$800 it would be a sure-fire winner, without a price cut it is going to stay an also-ran. Nokia’s comeback looks unlikely to set the market on fire.

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cellular towerEarlier this year Communications Minister Simon Bridges wrote to the Commerce Commission asking it to investigate competition in the mobile market.

Last Friday the Commerce Commission confirmed the study will go ahead.

The Commerce Commission says study aims to “better understand how mobile markets are developing and performing, particularly around the competitive landscape and any emerging competition issues”.

In his letter, Bridges noted that, unlike many other countries, New Zealand does not have thriving mobile virtual network operators.

Mobile virtual network operators

MVNOs are a feature of many mobile markets around the world. They can account for a large slice of the market. In Australia MVNOs are about 10 percent of the mobile market.

Often run by well-known consumer brands, MVNOs buy wholesale services on existing mobile networks. They then sell them to customers without needing to invest in infrastructure.

MNVOs can increase competition and give consumers greater choice. They also tend to reduce prices and squeeze margins.

Carriers unimpressed

New Zealand’s mobile carriers are not impressed. Spark, in particular has spoken out. The company says there is no case for new mobile regulation.

The company’s general manager regulatory affairs John Wesley-Smith is quoted in a notice to the NZX on the study. He says: “We have three world-class networks delivering prices that are well below OECD averages and three mobile network operators that are ploughing significant investment into an intensely competitive market.”

This is largely true. Seven years ago before 2degrees entered the market, New Zealand mobile prices were high by international standards. Today prices are a touch below international averages.

Moreover, margins have dropped. While the mobile networks are solid businesses, they are not awash in profits. It took until this year for 2degrees to make its first profit.

That alone tells you the market is competitive.

It also speaks volumes that 2degrees, the relative newcomer and the smallest mobile carrier, is not calling for more regulation. In the past it has been the beneficiary of intervention.

Competitive enough?

You could argue, the carriers almost certainly will argue, that consumers are well served by the existing competition. From this point of view the market settings appear to be right.

And yet not everyone is happy. Last month the NBR carried a report saying Vocus general manager, consumer Taryn Hamilton believes his company cannot grow its mobile business without regulatory intervention.

Vocus has an MVNO agreement with Spark. The Vocus brands, Callplus, Slingshot and Orcon offer mobile services. There is also a 2degrees MVNO agreement with The Warehouse.

In market terms these deals are a freak show. The existing MNVOs don’t add up to more than about one percent of the total mobile market. And that estimate may be generous.

Elsewhere in the world MVNOs can be seen as a positive by carriers.

Often the customers who choose an MVNO are the ones who would already be looking to move away from their existing accounts. If they choose an MVNO on the carrier’s network, the bulk of the revenue they generate stays with the carrier. There’s churn, but not churn to a rival carrier.

A new kid on the block

The other carrier-point-of-view argument in favour of boosting MVNOs in New Zealand is that it would keep out a fourth network. None of the existing carriers would welcome a new competitor.

In the past that may have seemed unlikely in a small market like New Zealand. However the market dynamics have changed.

New Zealand has four sizeable telcos: Spark, Vodafone, 2degrees and Vocus.

Vocus’ parent company faces challenges at the moment and is focused elsewhere. However, Vocus has been an aggressive investor in the past. It could be again.

Unlike smaller telcos, Vocus can buy spectrum. It could bid for new spectrum licences. It could build a fourth mobile network.

If the company decides mobile is straegic and can’t get what it considers to be a reasonable MVNO agreement with existing carriers, this is a plausible strategy. Let’s face it, mobile is stratgic for every sizeable telco.

Given this, Spark, Vodafone and 2degrees might do well to see the Commerce Commission study in a more positive light. Being forced by the regulator to offer more generous MVNO agreements would be preferable to facing a new rival.

Who’d want that?

Nokia 8There’s a Nokia 8 phone vibrating on the desk in front of me. Soon I’ll write a potted review of my experience with the phone. For now, let’s tease you with this: My first impressions are favourable.

Nokia’s new phones use Android. It makes sense. The phone operating system is popular. Android runs on about four out of five phones.

Android’s popularity brings two things to Nokia. First, it means familiarity, at least for most customers. There’s still a little learning to do, but not much. It’s not like, say, the jarring switch from iOS or Android to the Blackberry 10 operating system.

Or the less jarring but still non-trivial move from Android to iOS or vice versa.

It’s about the apps

More important, Android means Nokia phone buyers get access to a huge phone app library. Almost every important phone app is available on Android.

So from day one you can Facebook, Tweet or Instagram to your heart’s content. You can also do important or useful things.

Nokia last phone series used Microsoft’s Windows Phone operating system. The first rebooted Microsoft phone operating system was Windows Phone 7.

As phone operating systems go, Windows Phone 7 was brilliant. We can argue whether it was better or worse than Android and iOS. At the time it was at least on a par with the two more popular OSs for operating a handheld device.

Windows Phone 8 wasn’t quite as good. But then nor was desktop Windows 8 as good as Windows 7. By that time Microsoft lost the plot and added unnecessary complexity and flexibility. This may have appealed to geeks. For the rest of us it made an otherwise simple, elegant user interface harder to understand and use.

Momentum

The fatal flaw with Windows Phone wasn’t technical. It was that it never gathered enough momentum for take off. There were reasons for this. Not least Microsoft charging phone makers for the software. Google’s Android was free.

This lack of market momentum meant fewer app developers got behind Windows Phone. And when they did, they didn’t prioritise updating, refreshing or even fixing apps.

The lack of apps lead to a vicious cycle. It was a reason not to choose a Windows Phone, which made the pool of app customers smaller again. And so on.

Nokia’s parent company sold the phone business to Microsoft. That did little to change things.

Microsoft failed to capitalise on the excellent integration between Windows Phone and desktop Windows. This integration is something that continues to sustain the iPhone even though Macs are far less popular than Windows PCs.

Microsoft failed Windows Phone in many other ways. It failed to invest in development and seed third-party developers — something it did to great effect with desktop Windows.

The rest is history.

At the time Microsoft was still selling phones in reasonable numbers some argued a switch to Android could save the phone business.

That was never going to happen at Microsoft. For a variety of reasons, some good, some bad.

Putting aside politics and pride, there’s one overwhelming reason why Android was a bad idea.

Money

No-one at the time was making money from selling Android phones. Every Android maker other than Samsung was losing vast sums. Samsung was making a tiny margin and didn’t manage that every year.

That’s changed. Samsung now makes better margins on Android phones, although they are still small compared to Apple iPhone margins. Sony trimmed its Android business to the point where it is profitable again. At least two other Android phone makers, Huawei and Oppo appear to be making money selling phone hardware.

How about Nokia’s new owner, can it make a profit selling Android handsets?

It’s too soon to say for certain. As suggested at the top of this post, the phones are more than good enough. They cost somewhere between the middle and premium part of the Android phone market. They should sell.

Nokia passes the product quality test, but that’s not enough. Its Lumia phones were great quality yet didn’t sell in big enough numbers.

Whether they sell in profitable volumes is another question. The Android phone market is beyond saturated. They are still too many brands chasing customers. Samsung, Sony, Huawei, Oppo and a handful of Chinese brands and non-brands fight for every dollar.

Almost every 2017 midrange or premium phone is good. I can’t think of a single bad one. So Nokia’s prospects come down to things like its brand cachet, its distribution channels and its marketing. All these have to hum for the comeback to work.

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This year’s premium phones are better equipped and more powerful than most PCs. They also tend to be more expensive.

Phones have been pocketable personal computers for four or five years now. For most of that time their productive capacity has been on a par with desktops and laptops.

While there was no dramatic gear shift in 2017, the performance gap widened. It’s now at the point where there is no longer any doubt about the epicentre of personal computer power.

For most people, in most walks of life, the phone is by far the dominant device.

Smart than your average

Some still call them smartphones. Yet smart seems redundant when few people in rich countries carry non-smart phones.

Even the low-cost not-so-smart phones on sale in supermarkets, dairies and petrol stations meet everyday needs.

You still need a personal computer for heavy lifting. It’s one thing to provide a quick email answer on a phone. Creating a marketing report or writing a thesis needs a bigger screen and a keyboard.

That’s where desktop and laptop computers still rule. Although devices like Apple’s iPad Pro nip at the margins of those applications.

More personal

People often overlook something else about phones. Phones are far more personal than personal computers. You can share a PC with others — tools like desktop virtualisation mean some computers are less personal than others.

Most of us are far less inclined to share our phones and other people are less likely to ask or expect it.

Gung-ho technology enthusiasts get starry-eyed about the idea of wearable computers. They may yet be a serious alternative. But for now, phones perform the same role. They are close to us most of the time. Attaching them to our wrists wouldn’t change things much.

And they are intimate devices. Few of us are far from our phones for long. They go with us everywhere. Chances are, that you’re reading this on a phone and not a PC screen.

This means buying a phone is an important decision; the most important personal technology decision you make.

I’ll leave it to you whether you choose an Android or an iPhone. In general I’ve no sage advice recommending one over the other. If you use Apple computers or an iPod, then an iPhone makes sense. If you’ve invested in iTunes music or apps, then an iPhone makes more sense than an Android.

Likewise if you’ve invested in Android software or in Google, you might do better with Android. Windows fans can go either way.

Which to buy?

People often ask me which specific phones they should buy. Here I can help with more direct, practical advice, even if I don’t name names.

Buy a phone that you can afford. Don’t stress your budget to have the latest or greatest model. Don’t feel you need to update every year or even every two years. Many three or four-year old phones are often good enough for most purposes.

Look after your device; it should go on doing whatever it did when you first bought it for its entire physical life. You may have to forego software or operating system updates towards the end of its lifespan.

If you are upgrading, get the most powerful processor and the most storage you can afford. If money is tight, compromise elsewhere before skimping on these features. Android users can often buy phones with a nominal amount storage and add a memory card.

While Apple and Samsung phones are, in general, a cut about their rivals, all the well-known brands are good. Sony is often overlooked, but the phones are great. The new Nokia models seem fine, although it’s too soon to say for certain. Huawei is solid. Oppo phones are cheaper, but are not second-rate.

Most technology writers assume readers have unlimited budgets. I’ve always been aware than paying the thick end of $2000 for a phone is beyond many people. You can find many bargains for half that amount.

Even phones costing a third of that price tend to be worthwhile. Apple fans can pick up an iPhone SE for NZ$600. There are many solid Android options at around this price.

There are no bad premium phones at the moment. And life in the second rung isn’t too shabby.

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