Category Archives: Spain

Telefonica Impressive Performance and Spanish Telecos

telefonica-eleconomista Via El Economista I found this table that shows the impressive performance of Telefonica over the past eight years since Cesar Alierta took over the CEO position from Juan Villalonga. Telefonica has gone from 15th place in 2000 to be the 3rd Telco worldwide in market capitalization after China Mobile and AT&T.   

Telefonica started its international expansion into Latin America in the 80s. Juan Villalonga continued it during the 90s. The bet on emerging markets, specially Brazil, and the long-term commitment to the region even after the Argentinian crisis in 99, is now paying off. After Cesar Alierta culminated Telefonica’s leadership in the area with the purchase of SBC operations in Latin America, Telefonica Group has now more than 250 million subscribers worldwide, and growing. Later, the acquisition of O2 operations put the Spanish telco in the European map, after the earlier disappointing ventures with the expensive UMTS licenses in Italy and Germany.

Beyond the impeccable execution of Telefonica’s top management, I have my own theory of what contributes to Telefonica being the biggest Spanish multinational: its people.

For years the telecom engineering schools in Spain have attracted the best students, with the promise of a secure job in a promising sector in a country where unemployment rates had 2 digits for decades, before construction boomed fuelled by the now bursting bubble.

For years telecom engineers in Spain, telecos, had a reputation of bright intelligent people. Telefonica has been the top choice for telecos, ahead of other multinationals like Alcatel, Lucent, Ericsson or IBM and HP. Talent well managed always pays back. Well done Telefonica! Good job Mr. Alierta!

Disclaimer: I am Spanish and teleco, so I could be biased 😉

Martin Varsavsky on Web 2.0 Expo

Tim O’Reilly interviews Martin Varsavsky during the Web 2.0 Expo Europe last month. Martin is a serial entrepreneur that successfully created Jazztel and Ya.com to compete with Telefonica in fixed telephony and Internet access in Spain in the late 90s. He later IPO’ed Jazztel and sold Ya.com to Deutche Telekom with huge profits.

Martin is a very smart entrepreneur, and you can notice from the interview his clarity of thought.

  • “Markets are bipolar, and they over-emphasize good times and bad times. […] Entrepreneurs need to distinguish Price and Value […] (and) steer in the middle of the tremendous swings of the market, which are unreal in both ends. […] There are times when markets want to give entrepreneurs almost absurd amounts of capital, and others where the denial is absurd.”
  • His post on Sequoia’s panic is here.
  • Anecdote: The same bank that rejected Martin’s application for a $40,000 job, gave him a $12 million loan to start a company.

I am not a believer in Martin’s latest venture, Fon, that aims at creating a global community of Foneros that share their Wifi bandwidth. Although initially a good idea, with broadband prices falling , including 3G unlimited data plans, few people will be compelled to share Wifi, with the security risks involved, even if Martin claims in his blog that “it costs 85% less [to Operators] to send traffic through WiFi than through 3G.”

Whether Fon succeeds or not, Mr. Varsavsky is no doubt a savvy entrepreneur, and I feel proud we have him in Spain.

Pay-TV Market in Spain: IPTV wins

One out of two new Pay-TV users in Spain sign up with Telefonica’s IPTV service, Imagenio. Orange IPTV Service is the second one attracting new users with a 21% share in 2007. The table below is based on data from Spanish business newspaper, Expansion.

If we classify by technology, the table shows that 70% of the new Pay-TV users choose IPTV (Telefonica, Orange), 22% Cable (Ono, TeleCable, R, Euskaltel) and only 8% opt for Satellite (Sogecable).

By providing interactivity and on-demand services such as Catch-up TV, IPTV is quickly taking market share from satellite. New services, like watching the next chapter from popular TV series before its broadcast, are bringing users to IPTV and Cable. Interactive TV services are in its infancy, so expect new killing apps coming.

The Triple-play bundle with voice and broadband is also an advantage that IPTV and Cable operators are exploiting, to win users to Satellite.

Broadcast Mobile TV trials in Spain

Enrique Dans, one of the most influential bloggers in Spain, posted some interesting data about the Broadcast Mobile TV trials run by Abertis in Spain with each of the main mobile operators. Here is the translation:

“There has been three trials in Spain, run by Abertis, using Nokia 7710 handsets:

  1. Telefónica in Madrid and Barcelona from September 2005 to February 2006: 500 users, content from TVE1, TVE2, Teledeporte, 24H, Cuatro, CNN+, Jetix, 40TV, A3, Telecinco, FDF, TV3, Telemadrid, LaOtra and Intereconomia. 55% of the users said they would continue with the service for a price of €5/month, 75% would recommend it. Average usage was 16 minutes per day, with 71% between 15 ans 20 minutes.
  2. Vodafone in Seville and Valencia from December 2005 to March 2006: 300 users, content from Antena 3 TV, Net TV, Sogecable, Telecinco, Canal Sur, RTVE, Canal Nou and Veo TV. 80.08% would recommend the service, 80% considered it was easy to use.  Average usage 35.39 minutes/day on weekdays and 37.90 minutes/day om weekends.
  3. Amena (now Orange) in Zaragoza and Gijón from March to July 2006: 200 users, content from TVE1, Teledeporte, Canal 24h, Tele5 estrellas, Nova, Neox, Cuatro, 40 latino, CNN+, Net TV, Veo TV, Aragón TV and TV Asturiana.”

The results of the trials were quite promising in terms of usage and user experience. Since 2006 there has been serious improvement in the user interface, with the use of more sophisticated Rich Media Clients and a wider variety of handsets available. Rich Media Clients are Software clients installed in the handsets that allow for a more intuitive usage and better interactivity, including Electronic Service Guide. Therefore, expect a better user feed-back than two years ago.

The price model that we can foresee for Mobile TV is based on subscription. Since DVB-H and DVB-SH are broadcast technologies, there is no reason to charge based on usage the way 3G operators do today on unicast model, where the spectrum is occupied by a unicast channel for each user. All-you-can-eat model based on a flat fee is what broadcast Mobile TV technology enables.

Many Mobile operators deploying DBV-H/SH will have a hybrid model with both broadcast (for mass channels) and unicast (for video on demand and catch-up TV). We can foresee pricing models such as :

Basic fee with access to Free-to-air TV broadcast channels (under 5 Euro/month)
Premium broadcast channels to be subscribed individually or in bundles (1-3 Euro per individual Premium channel, and 5-10 Euros for bundles)
Video on demand over unicast channels with pay-per-clip or with subscriptions to Video on demand “channels”

Although there is an investment to build an overlay DVB-H/SH network for broadcast Mobile TV, Mobile Operators are in an unique position to take a share of the entertainment market:

– They own the mobile phone users and have a trusted billing relationship
– Mobile Operators can provide a broadcast and unicast combined package to users 
– 3G Operators can re-use sites and antennas by deploying DVB-SH in a band adjacent to UMTS

Mobile TV is getting closer to our pockets.

iJam was not part of the 2008 keynote

logo Apple
If Apple was from Spain:

http://www.ijam.es/

Music Industry subsidized by Spanish Government

While the worldwide music industry realizes that times have changed, and adapts to new customer habits to consume music,  the Government in Spain decided to tax electronic devices, as well as recordable DVD/CDs.

The rational is that all these devices (iPods, Cameras, Copiers, etc) can be used for illegal purposes, and therefore whether you use them for you family pictures, or for pirated music, you are charged with a tax that goes to the artists association SGAE.

Inconceivably, the law in Spain anticipates that all Spaniards are pirates and therefore they have to pay tax to the artists.

With this set-up , where all the consumers are legitimized to piracy by paying the tax, how do they expect people to buy legal songs?

Elsewhere, the industry looks for ways to monetize music, rather that asking government for subsidies. E.g. see how active the mobile music arena is becoming thru Apple.

In Spain, the music industry prefers to lobby the government and get the money, showing total disrespect to their customer.  Artists claim the tax  “protects the culture”, but it only protects the Staus Quo of a few untalented artists.