Tag: telecoms

IT spending still in the doledrums

quicksand1Worldwide IT spending is only going to increase by a miserable 0.6 per cent, according to beancounters at Gartner.

According to Big G fortune tellers, worldwide IT spending is forecast to total US$3.54 trillion in 2016, just a 0.6% increase over 2015 spending of US$3.52 trillion.

Last year saw the largest US dollar drop in IT spending since Gartner began tracking IT spending.  $216 billion less was spent on IT in 2015 than in 2014.  Gartner predicts that 2014 spending levels will not be surpassed until 2019.

John-David Lovelock, research vice president at Gartner blamed the rising US dollar. “US multinationals’ revenues faced currency headwinds in 2015. However, in 2016 those headwinds go away and they can expect an additional 5 per cent  growth.”

PCs, ultra-mobiles, mobile phones, tablets and printers are forecast to decline 1.9 per cent in 2016. This is because of a combination of economic conditions preventing countries such as Russia, Japan and Brazil from returning to stronger growth. There is also a shift in phone spending in emerging markets to lower-cost phones, is overlaid with weak tablet adoption in regions where there was an expectation of growth, Big G wrote.

Ultra-mobile premium devices are expected to drive the PC market forward with the move to Windows 10 and Intel Skylake-based PCs.

Gartner has slightly reduced the speed of adoption over the forecast period, as buying in Eurasia, Japan, and the Middle East and North Africa moves away from purchasing these relatively more expensive devices in the short term, but expect them to revert back to buying in 2017 as the economic environment stabilizes.

Data center systems’ spending is projected to reach $75 billion in 2016, a 3 per cent  increase from 2015. Demand in this segment is expected to continue to be strong through 2016.

The worsening economic environment in emerging markets has had little effect on the global enterprise software spending forecast for 2016, with IT spending on pace to total $326 billion, a 5.3 per cent increase from 2015. Key emerging markets, particularly Brazil and Russia, face escalating political and economic challenges.

Spending in the IT services market is expected to return to growth in 2016, following a decline of 4.5 per cent in 2015. IT services spending is projected to reach $940 billion in 2016, up 3.1 per cent from 2015. This is due to accelerating momentum in cloud infrastructure adoption and buyer acceptance of the cloud model.

Telecom service spending is projected to decline 1.2 per cent in 2016, with spending reaching $1.45 trillion. The segment will be impacted by the abolition of roaming charges in the European Union and parts of North America. While this will increase mobile voice and data traffic, it will not be enough to counter the corresponding loss of revenues from lost roaming charges and premiums.

UN Telecommunications agency backs H.265

A UN telecommunications agency has announced that its members have agreed upon a new compression format that could dramatically cut the amount of internet bandwidth currently used by video files.

Dubbed H.265, the codec requires just half the amount of data needed by its predecessor, H.264 and could save the world’s networks from being clogged.

Of course the codec is already being used, the Geneva-based agency, which says videos encoded using the H.264 format currently account for two-fifths of web traffic.

Official endorsement by the International Telecoms Union (ITU) is seen as important to getting worldwide adoption for the standard.

The ITU said that the codec would pave the way for “the next wave of innovation,” such as faster movie downloads and higher-quality video streaming.

“HEVC will lead to a brand new era of innovation with video broadcasting, one that spans the entire communication technology spectrum, including Ultra HD (4K) TV and mobile devices,” said the ITU in a statement.

Hamadoun I. Touré, ITU Secretary, said in a statement that the old H264/ MPEG-4 standard had contributed much to the rapid expansion of today’s global video streaming ecosystem. He noted the broad adoption of H.264 among digital broadcasters, who chose to forgo using their own proprietary standards in favour of the open standard, something that helped to make codec incompatibility a thing of the past.

“The digital video industry is now reliant on the ITU setting a global benchmark for video codecs, and for this reason there is no doubt in my mind that H.265 will be as effective, if not more so, than the previous standard,” said Touré.

The ITU said that HEVC H265 is a reliable, flexible and robust codec, future-proofed and capable of supporting digital video broadcasting for the next decade. It added that the codec has been designed to incorporate advanced streaming resolutions and will be slowly phased in over the next couple of years, as services and high-end products begin to outgrow the limitations of current display and network technology. 

Korean FTC rakes in record fines

Korea’s Fair Trade Commission collected a record number of fines against companies accused of price fixing, in the first 11 months of 2011.

Companies were made to pay back a total of $923 million (1 trillion won), exceeding the commissions’ expectations of $372.3 million (402.9 billion won). The sum was larger as a result of several large scale investigations.

Price fixing has increased in Korea as firms search for ways to make bigger profits. This year alone, Hitachi, HP and AUO have been fined for allegedly jumping into bed with their friends and manipulating LCD and other technology prices.  

As a result of such cases, the FTC made $179 million ($194 billion won) in fines from LCD panel makers and other technologies.

Other cases that raked in the cash were three local instant noodle makers who
were found to have cooked up plans for nine years to match product prices, while eight construction companies were fined after an investigation on collusion to win deals for the four rivers restoration project.

The Korean FTC’s record fine earnings comes months after it was criticised by parties who claimed it should not be given the exclusive right to decide if companies should face investigation for antitrust activities.

The watchdog was criticised after a series of lenient decisions made by the organisation, which saw its critics allege that it seemed more eager to protect businesses than victims of unfair treatment.

UN fights back against Google propaganda

Google is winning a propaganda victory against UN moves to regulate the internet, but now it appears that the International Telecoms Union, which is touting the changes, is fighting back.

For a while, the move by the UN telecommunications body has been pitched as a cunning plan to enable it to bring in tough controls for web users.

The claim comes from the US, which does not want to give up its own control of the internet under the bogus justification that it invented it.

But the secretary general of the UN telecommunications body, Hamadoun Toure, told Security Week that the review of the 24-year-old telecom regulations would not lead to internet freedom being curbed or controlled.

Toure said that such claims were “completely unfounded” and he found it a very cheap way of attacking the World Conference on International Telecommunications.

The conference is being held in Dubai to review regulations reached in 1988. If you believe the US, it is all part of a plan by autocratic regimes who want to censor the internet.

Toure told participants at the conference that the freedom of expression online will not be touched during the discussions.

He said that nothing could stop the freedom of expression in the world today, and nothing in this conference will be about it. He never suggested anything about controlling the internet.

Indeed, UN Secretary General Ban Ki-Moon told the conference the UN must work together and find a consensus on how to most effectively keep cyberspace open, accessible, affordable and secure.

So, if the UN does not really want to bring in internet controls, then why has the impression been conveyed that the web is about to fall into the paws of autocratic censorship-happy states?

It appears that part of the problem is that the UN is a global organisation which wants everyone to use the internet. To make sure that poorer countries are part of the broadband dream, the UN wants to tax big multinational telecos to pay for these projects. Google, in particular, has been named.

Google has been vocal in warning of serious repercussions on the internet if proposals made by member states are approved at the WCIT-12 meeting. It did not mention the tax but claimed that it was all about permitting censorship over legitimate content.

Bill Echikson, Google’s head of Free Expression in Europe, Middle East and Africa said that some proposals could permit governments to censor legitimate speech, or even cut off internet access. He made no mention of the tax.

Google claims that the ITU is not the right body to address internet regulation.

Echikson admitted that the ITU had helped the world manage radio spectrum and telephone networks, but it is the wrong place to make decisions about the future of the internet. This is because only governments have a vote at the ITU.

But Toure pointed out that the ITU worked on “consensus” and dismissed claims that the meetings in Dubai were secretive, telling reporters that the sessions are open.

Despite having backing from the US, Google claimed in a blog post yesterday that preliminary talks saw some “frightening proposals” discussed, including an Arab states’ proposal to have the ITU take over the allocation of  IP addresses.

It warned such moves “would cause duplication with the private sector ICANN,” the Internet Corporation for Assigned Names and Numbers. But that is not what ICANN’s chief Fadi Chehadi thinks. He thinks that his organisation and the ITU complement each other.

Google said some proposed treaty changes “could increase censorship and threaten innovation” and others “would require services like YouTube, Facebook, and Skype to pay new tolls in order to reach people across borders”.

The ITU said that these changes would pay for broadband access for developing nations, but Google claims that these will actually limit the ability of developing nations to get the internet.

Toure, referring to the suggested fees, dubbed as tolls, insisted to AFP that the meeting “is not about that… we are not discussing it.”

The US press hinted darkly that the conference is hosted by the United Arab Emirates, one of the countries that censors internet content, blocking political dissent and sexual material.

However, if the conference were being held in the UN headquarters in New York, then it would be fairly clear that Google could find nothing to point at.

If you look at the social networking sites, it is clear that Google is winning this particular propaganda war as most perceptions are that is about censorship – but in actual fact it appears to be about taxing Google to pay for third world internet development. 

Korean FTC slaps LG with paltry fine

The Korean Fair Trade Commission has used its powers to fine billion dollar company LG  a huge fine of… $74,300 (85 million won).

The paltry penalty, for obstructing the FTC investigation into claims of unfair pricing practices in March,  is sure to make the billion dollar company quake in its boots.

LG has also been reprimanded for secretly moving its memory drives when investigators demanded that the door be opened.

Another manager at the company has also been accused of deleting files on his external drive after FTC agents ordered him not to do so, the Joongang Daily reported.

The watchdog began investigating the company after smaller retailers asked it to check if the company was providing its products at different prices.

However, many will be unimpressed at its lack of backbone issuing such a small fine.

Earlier this week critics hit out at the watchdog for being “too lenient”  and this latest incident isn’t compelling evidence to the contrary.

LG has somewhat become a favourite with the watchdog. In 2009 LG was let off the hook when it was investigated and found guilty of fixing the prices of home appliances between 2008 and 2009.

Critics claimed that the regulator’s leniency program meant that LG was exempted from the fine of $16 million (18.83 billion won).

Up until 2000, the FTC filed a complaint against two percent of the total cases detected.

However, this figure had dropped to 0.95 percent over the past 10 years even though the annual number of cases the agency handled had increased five- to six-fold during the same period.

Of the 3,505 cases the FTC detected in 2010, the agency filed a complaint in only 19 cases. In 1,763 cases, the agency ended up issuing a warning.

LG family member chucked in the clink

A member of the LG Group family has been slapped with the cuffs and slung into the clink for three years after being found guilty of stock manipulation and embezzlement.

The Supreme Court locked up Koo Bon-hyun, the nephew of LG honorary chairman Koo Cha-kyung, after he was found guilty of raking in around $11.7 million (13.9 billion won) ($11.7 million) of illegal profits by manipulating the stock price of Exa E&C –  an electronic components and environmental company.  

It is claimed he managed to do this by spreading false information about the company during the process of taking over a new materials company in 2007. At that time, he was serving as a chief executive of the company, which had no relation to LG.

The 45-year-old was also convicted of embezzling  millions of dollars of company funds through accounting fraud.

However, Koo Cha-kyung may have to bite his tongue if he was thinking about having a word with his wayward nephew as LG is not a stranger to finding itself in a spot of bother.  

Back in May the company, along with Samsung and Pantech, were slapped with a
combined fine of $40.1 million (45.3 billion won) after the South Korean Fair Trade Commission claimed the group plotted together to mark up the prices of mobile handsets.

Disabled and retired ex-employees in pay dispute with Nortel

Nortel’s US arm is trying to project manage its way out of a dispute involving pensioners and disabled workers who were once at the company.

Nortel is gunning to shut off the health care and disability pay that it owes its former employees as well as squirm its way out of paying pensions. However, disgruntled ex staff aren’t letting the company off so easily. Although there have not been any figures on how much these pay outs to ex workers will cost, it is likely to eat up a chunk of the company’s assets. 

Nortel made roughly $7 billion selling off its businesses after filing for bankruptcy. Now it is trying to strike a deal with affected ex-employees, turning to mediators after the company failed to get the results it wanted. As Nortel puts it: “talks aimed at setting out terms have gone nowhere.”

The telecoms company is desperately trying to sort the terms out. At the moment, the dispute is causing an enormous delay in tying up all the loose ends. Meanwhile, debt investors want to grab the cash ex-staff are looking for.

A lawyer familiar with US employment law told TechEye that once a company has offered benefits including medical, disability, dental, and life insurance, the federal anti-discrimination laws and health plan enforcement regulations come into play. 

“These ensure that an employee’s rights are protected under those health plans,” he said. “This law is also loosely applied to those with disabilities and those with pension plans. The latter especially. If a pension plan is in place then a company must adhere to this, unless it has filed for bankruptcy and there is evidence that there is a lack of funds to pay this.”

Telcos set to lose $23 billion as social messaging kills SMS

Money bags mobile telecoms firms may feel their wallets become slightly lighter as analysts forecast $23 billion losses in SMS revenue – thanks to social media messaging.

Telecoms operators around the world are set to feel the pinch as the likes of Facebook claw into profits usually collected through text messaging.  This is after a loss of $9 billion to social messaging in 2011.

Analysts at Ovum are about to release a report which will highlight the massive impact on firms which are seeing customers turn to IP based messaging players rather than paying to send a text.

The onus is now on telecoms companies to try and expand their range of services to compete.

With this in mind, telecoms firms are having to look to create new services to squeeze more cash out of customers through the IP channel.

Social messaging has allowed for companies to grow which are providing services that eat into profits of the major telecoms companies. 

By creating their own versions, telecoms firms can attract customers onto data plans, and in some senses the disruption could enable revenues to be shifted to other parts of their businesses.

Recently, the boss of US social messaging service WhatsApp said that his service would actually benefit mobile firms by helping move consumers to data plans as quickly as possible.

Samsung and its mobile mates hit with price fixing fines

A cartel of mobile handset manufacturers and telecommunications companies have been slapped with a fine after being found guilty of price fixing and fraud.

South Korea’s Fair Trade Commission (FTC) gave Samsung, LG, Pantech and mobile operators SK Telecom, KT Corp and LG Uplus a combined fine of $40.1 million (45.3 billion won) claiming the cosy little group plotted together to mark up the prices of mobile phone handsets.

It is believed the mobile handset manufacturers artificially marked up the prices of 209 models.

They then handed these over to their mobile service operator mates, which tricked customers by advertising discounts on the products and services that should not have been so expensive in the first place.

SK Telecom was found to be the worst offender and was slapped with a $17.9 million (20.2 billion won) penalty. Samsung was the most disgraced handset maker, and was ordered to cough up $12.5 million (14.2 billion won).

However KT didn’t have to splash as much cash as its mates, being given a $4.5 million (5.1 billion won) fine.

As well as the fines, the red faced companies have also been ordered to show how much they pushed these false incentives to make their sales. They’ve also been slapped with a ban preventing them from offering future sales promotions.

A commissions spokesman told Yonhap News that the companies took advantage of the “complicated price setting practices in the mobile telecommunications sector to trick customers.”

He added that the companies found to have tricked customers didn’t have “transparent rules” for setting such prices.

Price fixing is nothing new in the Asian tech space. On Monday, Taiwanese flat panel giant AUO was accused of fixing its panel pricing, while in the past LG, Samsung and others have ended up in the deep end with authorities in both the US and Asia.

Thai floods continue to wreak havoc

The serious flooding in Thailand is causing further disruption to the supply chain, with telecoms equipment manufacturer Opnext the latest to report problems.

Heavy seasonal rain has lead to flooding in factoriescausing companies to rethink their supply or shut down operations altogether. Western Digital, for example, has a couple of factories literally underwater – causing a knock-on effect to other firms which rely on it as a supplier. 

The floods have also impacted the telecoms industry.

Opnext’s primary contract manufacturer, Fabrinet, announced that it has been hit by flooding in its offices and manufacturing floor spaces where Opnext products are made. Fabrinet is reporting several feet of water at its Chokchai campus.

Unlike the tsunami in Japan, where roads and infrastructure were put in place as soon as possible, Thailand is suffering from a lack of transportation and utilities. Part of the problem is due to rapid urbanisation in the country.

Opnext says it’s difficult to ascertain the impact on its financial results, as it plays the waiting game to find out how long a clear-up operation will take.

But it has stated that the flooding will have a knock on effect on its operations and its ability to meet customer demand in the near future.  Fabrinet could be required to suspend operations at Chokchai for longer than it thinks. 

Even worse, Thailand’s government could call a state of emergency which would further damage operations.

More details should appear in the company’s second fiscal quarter earnings report, next Tuesday.

Meanwhile, Thai authorities have called a five day holiday to ease the impact of the floods as they threaten Bangkok.