Vodafone España: Spanish big-three take big hit over message pricing infringements

23 January 2013




<i>Vodafonewatch Report #109</i> <b>Extract</b>


Spanish big-three take big hit over message pricing infringements

Vodafone Spain (VfS), and main mobile rivals, Orange Spain and Telefónica España, were handed substantial fines by the country’s Comisión Nacional de la Competencia (CNC/National Competition Commission), following a long-running investigation into their wholesale charges for MMS and SMS messages (Vodafonewatch, passim).

The antitrust body, which began looking into the operators’ rate-setting policies in January 2011, said it had deemed them guilty of abusing their dominant position in the wholesale markets for access, origination, and termination of messages between 2000 and 2009 — a period when those services were unregulated. This, said the CNC, allowed the providers to “overprice” termination services, and set “high” origination and access fees — enabling them to maintain higher retail rates for messages, while also squeezing mobile virtual network operator (MVNO) rivals on termination pricing.

The decision firms up a draft ruling, issued by the CNC in December 2011, which also indicated Orange, Telefónica, and VfS had set excessive rates.

The fine handed to VfS amounts to EUR43.5m (£35.5m) — which represents around 6% of the OpCo’s operating profit in its last full financial year (FY11-FY12). Telefónica and Orange received penalties of EUR46.5m and EUR30.0m, respectively.

The three operators have the right to launch an appeal — and all indicated they plan to do so, with Telefónica describing its fine as “completely unfair”.

Fine accentuates VfS pre-crisis weaknesses

As well as the direct financial blow, the penalties feed into a broader picture of VfS as a business that came into Spain’s downturn unprepared, with pricing and cost structures that were bloated and ripe for attack by smaller, discounting rivals, once competitive and regulatory conditions tightened (Vodafonewatch, passim).

Messaging pricing had long been attacked by users as inflated in Spain, and was clearly a vulnerable area for the OpCo — data from the country’s Comisión del Mercado de las Telecomunicaciones (Telecoms Market Commission) indicates Spanish operators’ total revenue from SMS messages more than halved between the fourth quarter of 2012 (Q4 CY08) and Q2 CY12, from EUR419m to EUR184m. Vodafone reported £47m in Q2 FY12-13 messaging turnover from VfS, 47% lower than two years earlier, although this drop is exaggerated by weakening of the euro against sterling (Vodafonewatch, #108).

VfS has been focusing on reducing costs in recent years, to counterbalance the competitive challenges (and reports suggest it is now preparing major layoffs), but continues to appear somewhat off-kilter in the market — with revenue down 12.0% in the first six months of FY11-FY12, amid ongoing attacks from smaller rivals, and attempts at a resurgence by Telefónica, the market leader, via integrated offering, Movistar Fusión (Vodafonewatch, #103, #106, and #108). Spain was also recently named by Group Chief Executive, Vittorio Colao, as one of the markets where Vodafone’s messaging and voice revenue is most vulnerable to over-the-top competition from rivals such as Skype and WhatsApp.

BT pricing battle also in pipeline

As well as the messaging probe, Orange, Telefónica, and VfS remain under investigation by the CNC over fixed-line and mobile service pricing for business users, following complaints by BT Spain flagged in early-2012 (Vodafonewatch, #98). BT operates a corporate-focused MVNO in Spain, but claims it has been unduly hurt by high call origination and termination charges from the three operators. The exact timetable for the investigation is unclear, but the CNC indicated at its inception that it could be completed by mid-2013.

[Further reference: CNC levies fines of nearly EUR120 million on Telefónica, Vodafone, and Orange for abusing their position in the wholesale telephone short messaging markets -- CNC, 20 December 2012; Spain fines Telefónica, Vodafone, Orange over texts -- Reuters, 20 December 2012.]


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About Vodafonewatch

Report: #109
Covering: January 2013
Published: January 2013
Next report: February 2013

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<b>Contents</b>


Vodafonewatch Report #109 contents

1 Executive brief

4 Group

4 M&A
4 Papua New Guinea entrance appears to move closer
4 Deal not yet firmed up
5 M2M Solutions
5 French Polynesia expansion misses deadline
6 Operations
6 Vodafone in talks over new central “software” facility
7 Partner Markets
7 Vodafone abstains as Icelandic partner lists
8 People
8 “…OUT OF CONTEXT…”
8 Joussen optimistic on post-Vodafone future
8 People
8 Table 1. People movement highlights
10 Suppliers
10 Partner/supplier people movement highlights
12 Group Foundation
12 Vodafone partners with GSK on Africa health initiative
12 Investments & associates
12 McAdam gives Colao a poke over VZW

14 Northern & Central Europe Region

14 Czech Republic
14 Czech Republic latest to attempt MVNO boost
15 Germany
15 VfD lays out next LTE rollout targets
16 Ireland
16 Table 2. LTE coverage and targets for German network operators, January 2013
16 Tellabs gains network analytics deal
17 Netherlands
17 VfIr gets lift from ComReg warning to Eircom
17 VfN holds firm in big-spending digital dividend sale
18 VfN coy, but gains look healthy
18 Table 3. Dutch multiband auction spending, December 2012
18 Table 4. Spectrum holdings of Dutch players before and after multiband auction, December 2012
18 Tele2 disruption looms
19 VfN stays the course, despite over-reach fears
19 VfN plots major retail overhaul, post-BelCompany buy
19 BelCompany brand survives
20 Partial fit with ongoing Group Retail revamp
22 Romania
22 Colao uses Romania trip to push net-sharing message
22 Regional, local pressures combine
23 United Kingdom
23 VfUK ties with PLDT on Filipino MVNO
24 MVNOs a new addition to Partner Markets catalogue?
24 Seven bidders confirmed for 800MHz, 2.GHz auction
25 One Net still bedevilled by technical problems
26 VfUK prepares for Weve with Vodafone Select launch
26 Playing catch-up
26 VfUK hits out at Ofcom’s contract cancellation plans

27 Southern Europe Region

27 Greece
27 VfGr expands SingularLogic tie-up with mobile health app
28 Italy
28 VfIt adds more cities to LTE footprint
30 Spain
30 Orange affirms threat with Simyo buy
30 Yoigo next in sights
31 Big-three take big hit over message pricing infringements
31 Fine accentuates VfS pre-crisis weaknesses
32 BT pricing battle also in pipeline
32 VfS shutters online, mobile TV services in RTVE spat
33 VfS belatedly showing more fight

34 Africa, Middle East & Asia-Pacific Region

34 Egypt
34 Ghana
34 TE separation talk continues
34 Group likely to be a reluctant buyer
35 India
35 Discussions over CGT truce mooted
37 Qatar
37 VfIn hit by criminal charges over pre-Hutch buy dealings
37 Latest addition to India mess
38 South Africa — Vodacom
38 Controversial spectrum fee demand lands on VfIn
39 Mozambique — Vodacom
39 3G roaming dispute heats up as DoT hands out fines
40 VfIn preps M2M debut
40 Kenya — Safaricom
40 Ericsson, Huawei bag fibre expansion wins
41 Plans appear watered-down
42 Safaricom sued over M-Shwari IP
42 Case adds to pressure for M-Shwari success

43 Index


<b>Index</b>


Vodafonewatch Report #109 index

A

Aditya Birla Group
- Idea Cellular 39
Africa 8, 9, 10, 12, 13, 23, 34, 38
- Ghana 9, 34, 35
- Guinea 4
- Kenya 40, 41, 42
- – Government 41
- – Kenya Power & Lighting Company Ltd. 41
- – National Optic Fibre Backbone Infrastructure (NOFBI) 41
- Mozambique 12, 13, 39
- South Africa 9, 12, 13, 38
- Tanzania 13
Alcatel-Lucent 10
Amalgamated Telecom Holdings (ATH)
- Vodafone Fiji 4, 5
Amazon.com Inc. 24
Americas
- Canada 34
- Caribbean 5
- North America 23
- Panama 5
- USA 9, 12, 17
- – States
- – - New York 19
Apple 10, 20, 22, 27
- iOS 22
- iPad 10, 22
- iPhone 10
- iTunes 27
Asia-Pacific 5, 10
- Australia 17, 22
- China 12, 23, 40, 41
- Fiji 4, 5
- French Polynesia 4, 5
- Guam 23
- Hong Kong 5, 23
- India 6, 7, 9, 10, 22, 34, 35, 37, 38, 39, 40
- – Cellular Operators Association of India (COAI) 37, 38
- – Department of Telecommunications (DoT) 37, 38, 39
- – Government 6, 35, 37, 39
- – Licence Circles
- – - Maharashtra 6
- – - Mumbai 10, 40
- – Telecom Disputes Settlement & Appellate Tribunal (TDSAT) 38
- – Telecom Regulatory Authority of India (TRAI) 34, 38
- Japan 23
- Malaysia 9, 23
- New Zealand 9
- Philippines 12
- Singapore 23
- Taiwan 23
AT&T 17
Axel Springer AG 15
Axiata Group Bhd (TM International)
- India (Idea Cellular, see also Aditya Birla) 39
- Malaysia (Celcom (Malaysia) Bhd) 9

B

Banca ITB 30
Bharti Group 37, 38, 39, 40, 41
- Airtel 37, 38, 39, 40, 41
- – Africa
- – - Kenya 41
Blyk 26
BT Group 24, 32

C

Carphone Warehouse 20
- Talkmobile 24
Central Board of Direct Taxes (CBDT, India) 35
China Telecom 23
Cognatel Ltd 24
Commercial Bank of Africa 42
Conexus Mobile Alliance 24
Corporacion de Radio y Television Espanola (RTVE) 32, 33

D

Data Select 37
Deutsche Telekom 8, 10, 16, 18, 22, 24, 27
- Europe
- – Czech Republic 14
- – Netherlands 18
- – Romania (see Cosmote Romania/OTE) 22
- – UK (EE) 17, 23, 24, 26
- Germany 15, 16, 17
- Investments
- – OTE (see separate) 22, 27
- USA 17
Digicel 5
- Pacific 5
- – Fiji 5
- – Samoa 5

E

EE (see DT, FT) 17, 23, 24, 26
eircom 17
Equity Bank Limited 42
Ericsson 28, 40, 41
Europe 6, 8, 10, 12, 14, 15, 19, 22, 23
- Central Europe 8
- Czech Republic 14, 15
- – Czech Telecommunications Office (ČTÚ) 14, 15
- Faroe Islands 7
- France 4, 5, 8, 18, 30
- Germany 5, 15, 16, 17, 27
- – Länder
- – - North Rhine-Westphalia (Düsseldorf) 5
- Greece 22, 27
- Hungary 6, 7, 14, 15
- Iceland 7
- Ireland 10, 15, 16, 17, 22, 24
- – Commission for Communications Regulation (ComReg) 16, 17
- Italy 12, 17, 28, 30
- Netherlands 17, 18, 19, 22, 24, 35
- Norway 38
- Portugal 9, 16
- Romania 6, 9, 14, 16, 22
- Scotland 24
- Spain 12, 22, 27, 30, 31, 32, 33
- – Comisión del Mercado de las Telecomunicaciones (CMT) 31, 33
- – Comisión Nacional de la Competencia (CNC) 31, 32
- – National Competition Commission 31
- Turkey 8
- United Kingdom (UK) 8, 10, 15, 17, 19, 22, 23, 24, 37
- – Office of Communications (Ofcom) 24, 26
European Union 23, 26
- European Commission 33
Expedia 9

F

Faulu Kenya 42
Finsphere Corp. 8
Fonomat 20
France Télécom
- Egypt (Mobinil) 34
- Orange 22, 26, 30, 31, 32, 33
- – Kenya (Telkom Kenya, see separate) 41
- – Romania 22
- – Spain 30, 31
- – - Simyo 30
- UK (see EE) 17, 23, 24, 26

G

Gamma Telecom Ltd 24
Gemalto NV 28
- Internet Payment Exchange 28
GlaxoSmithKline 12
Google 27
- Android 17, 22, 27
- Google Play 27
Green Light Financial & Telecoms Services
- Ezetop Ltd 38

H

Huawei Technologies 5, 12, 28, 40, 41
- Radio Mobile Innovation Centre (see Vodafone) 12
Hutchison Whampoa 35, 37
- HTIL 35, 37

I

IBM 13
Intracom Holdings
- Hellas On Line (HOL) 27

J

Jamii Telecommunications Ltd (JTL) 41

K

Kenya Data Networks (KDN) 41
Kontron 5
KPN 18, 30

L

Lebara Group 24
Lloyds Banking Group plc
- HBOS
- – Insight Investment 16

M

Market segments
- Fixed broadband 35
- M-health 13, 27
- Mobile broadband 17
- Mobile data 23
- Mobile virtual network (MVNA/MVNE/MVNO) 14, 15, 23, 24, 30, 31, 32
- M-payment 28, 30, 37, 42
- Network-sharing 22
- Outsourcing 20
- Over-the-top (OTT) 31
- Small- to medium-size enterprise (SME/SMB) 25
- Value-added services (VAS) 13, 27, 34, 40
- Voice 6, 10, 24, 27, 31
Marks & Spencer 8, 9
MatsSoft Ltd 13
MeinFernbus 15
Microsoft 9
- Skype 31
- Windows Mobile 27
- Windows Phone 17
Middle East 8, 10, 23, 34
- Egypt 34
- – National Telecommunication Regulatory Authority (NTRA) 34
- Qatar 37, 38
- – Supreme Council for Information and Communications Technology (ictQATAR) 38
- Saudi Arabia 8
MLL Telecom 24
Mobinil 34
MTN 38
- South Africa 38

N

NASDAQ 7
Nokia 10
Nokia Siemens Networks 10
Novartis AG 13
Novatel Wireless
- MiFi 15
NTT 23
- DoCoMo 23, 24

O

Opera Software 34
OTE (Hellenic Telecom. Org. SA, see DT) 22, 27
- Cosmote 22
- – Romania 22
- Romania (Romtelecom) 22

P

Pacific Mobile Telecom (PMT) 4, 5
PCCW 24
PGG Wrightson Limited 9
Philippine Long Distance Telephone Co. (PLDT) 23, 24
- Smart Communications 12
- SMART Pinoy 23, 24

Q

Qatar Telecom (Qtel) 38

R

Reitsma Financal Group LLC 19
Reliance-Anil Dhirubhai Ambani Group
- Reliance Communications (RCom) 38, 40
Research In Motion 10, 17, 27, 34
- BlackBerry 10, 17, 27, 34
Rockefeller Foundation (RF) 13
Romtelecom 22

S

Safaricom 40, 41, 42
- Executives
- – Waita, Nzioka 40
- M-KESHO 42
- M-PESA 37, 42
SC Direct One 22
Scripps Networks Interactive Inc. 22
SingularLogic S.A. 27
SMART Communications 23
Societa Trasporti Provinciale spa Bari 28
Supreme Court 35, 37

T

TalkTalk Telecom Group plc 24
Technology
- 2G 5, 17, 37, 38
- – CDMA 38
- – GSM 38
- 3G 5, 16, 17, 39
- – HSPA 15
- 4G 19, 23, 24, 28
- – Long Term Evolution (LTE) 15, 16, 17, 18, 28
- Cloud computing 9, 16
- DSL 17
- Fibre 40, 41
- IP 42
- M2M 5, 40
- MMS 26, 31
- MNP 38
- Mobile TV 32, 33
- NOC 16
- SIM 23, 40
- Smartphone 13, 20, 22, 23
- SMS 13, 26, 28, 31
- Spectrum 14, 17, 18, 19, 24, 28, 37, 38, 39
- – 800 MHz 17, 18, 24, 28, 38
- – 900 MHz 17, 18
- – 1800 MHz 14, 17, 18, 28, 38
- – 2100 MHz 17, 18
- – 2600 MHz 17, 18
- – Digital dividend 17, 19, 28
- USSD 37
- VDSL 27
- Windows 17, 27
- – Windows Mobile 27
- – Windows Phone 17
- W-LAN 15
Tele2 18
Telecom Egypt 34
Telecom New Zealand 9
- Gen-i 9
Télécoms Sans Frontières 12
Teleena 23, 24
Telefónica Group 8, 14, 15, 16, 23, 24, 26, 31, 32, 33
- Europe 14, 15, 26
- – Czech Republic 14
- – España 31
- – UK 8, 23, 24, 26
- Movistar 30, 31
Telenor ASA
- DiGi Telecommunications 9
Teleperformance 16
Televiziunea Romana (TVR) 22
TeliaSonera 30
- Yoigo (Xfera) 30
Telikom PNG 4
- BeMobile 4, 5
Telkom Kenya Ltd (Orange Kenya) 41
Tellabs 16
Telstra 17
Teradata Corp. 8, 9
Tesco 15
The Siemon Company 28
TransferTo 38
Travel Channel (Scripps/Cox) 22
TUI AG 8, 10
Twitter Inc. 10

U

United Nations 13
UPC 15
Usaha Tegas Group Holdings Bhd
- Maxis Communication, Malaysia 9
- – Aircel 9

V

Verizon Communications 12, 13
- McAdam, Lowell 12, 13
- Verizon Wireless 12, 13
- Vodafone Omnitel 19, 28, 30
Visa 37
Vivendi 8
- Canal Plus 32
Vodacom Group 9, 12, 38, 39
- Executives
- – Maseko, Sipho 9
- Ex-executives
- – Santos, Jose dos 9
- – Uys, Pieter 9
- Group 9, 12
- Mozambique 9, 12, 13, 39
- South Africa 9, 12, 13, 38
- Tanzania 13
Vodafone
- Africa, Middle East, and Asia Pacific Region (AMAP) 9, 34
- – Africa 8, 9, 10, 12, 13, 23, 34, 38
- – Asia 5, 10
- – Australia 17, 22
- – Egypt 6, 34
- – - Vodafone International Services 6
- – Fiji 4, 5
- – Ghana 8, 9, 34, 35
- – India 6, 7, 9, 10, 22, 34, 35, 37, 38, 39, 40, 41
- – - Vodafone India Services Pvt Ltd 6
- – Kenya (see Safaricom) 40, 41, 42
- – Middle East 8, 10, 23, 34
- – Mozambique 9, 39
- – New Zealand 9
- – Pacific 4, 5
- – Qatar (see Vodafone and Qatar Foundation and Vodafone Qatar) 37, 38
- – South Africa (see Vodacom) 9, 12, 13, 38, 39
- Corporate
- – Vodafone International Holdings BV 35
- Executives
- – Andreas, Helena 8, 20
- – Arjomandi, Fay 8
- – Beck, György 6
- – Bertoluzzo, Paolo 8
- – Bourland, Eric 8
- – Braovac, Matthew 23
- – Chopra, Naveen 40
- – Colao, Vittorio 12, 13, 20, 22, 30, 31
- – Couto, João 9
- – Della Valle, Margherita 8
- – Dennelind, Johan 9
- – Halford, Andy 8
- – Joosub, Shameel 33
- – Matei, Gabriela 9
- – O’Neill, Kevin 16
- – Read, Nick 9
- – Roman, Francisco 32
- – Román, Francisco 32
- – Schulte-Bockum, Jens 15
- – Squire, Tara 35
- – Vandevelde, Luc 8
- Ex-executives
- – Ireland, Tobin 8, 9
- – Joussen, Friedrich 8
- – Miles, Tim 9
- – Murray, Simon 5
- Group 5, 8, 10, 13, 40
- – Partner Markets 4, 5, 7, 8, 9, 12, 24, 34, 42
- – - Caribbean (Digicel) 5
- – - Fiji (Vodafone Fiji) 4, 5
- – - Iceland (Vodafone Iceland) 7
- – - Japan (NTT DoCoMo) 23, 24
- – - Kenya (Safaricom) 40, 41, 42
- – - Malaysia (Celcom) 9
- – - Panama (Digicel) 5
- – - Philippines (SMART) 23
- – R&D
- – - Radio Mobile Innovation Centre (see Huawei) 12
- – Strategy
- – - EVO 6
- – Vodafone Global Enterprise (VGE) 5, 40
- – - mHealth 13
- – Vodafone Internet Services (VIS) 32
- – Vodafone Operations Centre Hungary 6
- – Vodafone Ventures 8
- – - Finsphere (see separate) 8
- – xone 8
- Investments & Associates
- – Americas (see Verizon Wireless) 12, 13
- Northern & Central Europe Region 14
- – Cable & Wireless Worldwide 7, 23, 25
- – Czech Republic 14, 15
- – Germany 5, 8, 15, 16, 17, 27
- – Hungary 6, 7, 14, 15
- – Ireland 10, 15, 16, 17, 22, 24
- – Netherlands 15, 17, 18, 19, 20, 22, 24, 35
- – - BelCompany 19, 20
- – Romania 6, 9, 14, 15, 16, 20, 22
- – - Sayfone 20
- – Turkey 8
- – UK 8, 9, 10, 15, 17, 19, 20, 22, 23, 24, 25, 26, 37
- – - Cornerstone Telecommunications Infrastructure Ltd 23
- – - Weve 26
- Products
- – 4doctors 27
- – BlackBerry M 10
- – Business 40
- – Instant Network 12
- – International (UK) 6, 35
- – MyVodafone (Romania) 22
- – Nearly New 23
- – One 25
- – One Net 25
- – One Net Directory 25
- – Red 23
- – SMS for Life 13
- – Terminals
- – - Smart 30
- – Vodafone Select 26
- – Vodafone TV 32
- Site Solutions Innovation Centre (SSIC) 12
- Southern Europe Region 27
- – Greece 27
- – Italy 12, 17, 19, 28, 30
- – Portugal 9, 16
- – Spain 12, 19, 20, 22, 30, 31, 32, 33
- Vodafone Foundation 12
- – Group 13
Vodafone Iceland 7
Vodafone Qatar Q.S.C. 37, 38

W

Wal-Mart Stores Inc.
- ASDA 24
Weather Investments
- Orascom Telecom
- – Mobinil (see France Télécom) 34
- – Wind Telecomunicazioni 28
World Bank 16, 18

Z

Zain (MTC) 8
Zesko Holding BV
- Ziggo 18


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