BARCELONA, Spain - Cell phone manufacturers and network operators may be able to ride out the recession as consumers view their handsets as an essential rather than a luxury, but there's a potential dark cloud on the horizon for the mobile technology industry - the capacity crunch.
As our appetite for mobile internet and data services continues to grow, thanks to devices like the iPhone, mobile service providers are soon going to fiind that their networks won't cope with demand.
Too much traffic will clog the wireless highway and the networks know that they have to invest heavily in their infrastructures to head off the problem.
In the current economic downturn they'll find it hard to raise the required funds by borrowing and are reluctant to pass on the cost to consumers who are unwilling to pay more.
The most likely solutions, mobile advertising and peak time network congestion charging are also unpallatable. So there's no easy answer to this thorny issue, which is one of the main talking points here at this year's Mobile World Congress in Barcelona. Watch more about the capacity crunch
I've just completed my first two big CEO interviews planned for this week at the Mobile World Congress, and they couldn't have been more different.
First it was Microsoft's Steve Ballmer, who is here to launch an upgrade to the Windows mobile operating system (look out for my TV reports for details).
Steve's a cool guy and gave us a great interview, but before we could talk to him we had to negotiate the huge, highly efficient Microsoft media machine.
We were placed into the care of no less than four different minders before being ushered into the great man's hotel suite overlooking the conference venue for our 10-minute audience which was over all too quickly.
Contrast that with the welcome we got at RIM, the makers of BlackBerry devices.
I know it's a much smaller company, but the atmosphere at their show "chalet" was so much more relaxed and informal.
Joint CEO Jim Balsillie was his usual, cheerful and irreverent self and gave his time generously, even when I asked him awkward questions about stock options which have been getting RIM into the news for all the wrong reasons. (You can see both interviews throughout the week on CNN or here at cnn.com.)
Otherwise, it's been a crazy first morning here at the Congress. First job of the day was an early call on a company called Tellabs, which helps mobile operators get the best out of their networks.
They told us about a survey they commissioned in which they asked mobile consumers about their future plans. The results have given the mobile telecoms industry confidence it can weather the worst of the economic downturn.
It showed that while people may be reluctant to splash out on a handset upgrade in the near future, they aren't planning to cut back on the number of calls they make or the amount of data they use.
It would seem that we just can't live without our beloved mobiles and in a recession our phone bills will be considered by many as essential spending.
Watching politicians dissect the bankers responsible for some of the worst of the financial crises has been very satisfying - but it has brought out the very worst in me: the drive for revenge.
The former chairmen and CEOs of HBOS and Royal Bank of Scotland had an uncomfortable time being questioned by the UK Treasury Select Committee, a government panel investigating how these financial giants ended up needing multi-billion dollar bailouts.
They all duly said sorry, and then tried to tell us why it really wasn't their fault the banks collapsed, and that they'd personally lost more money than most.
But I wanted more. I wanted mea culpas of the gravest kind. "It happened on my watch. I am responsible. It is my fault." And of these there was naught.
Some came across with great sincerety. Former HBOS chairman Lord Stevenson, seemed truly troubled by what had taken place.
Others gave the impression this had been a nasty setback to an otherwise nakedly ambitious career - For instance Andy Hornby of HBOS's failure to acknowledge any personal culpability. It is easy to see why, for some, he has become a poster child for banking excess.
I am not proud of myself for wanting this revenge. But since we will be paying for these men's (and others) mistakes for years to come I feel justified.
LONDON, England – You might think Pablo Dimoglou was a little crazy when he decided last year to launch a new grocery store just a mile or so away from one of the biggest Tesco supermarkets in the UK.
Dimoglou has made a success of underselling superstores.
Dimoglou had had enough of his career in the events management business and decided to open a farm shop selling local produce from farmers around Norfolk, eastern England. So he and a partner set up shop, literally, and it didn't go well. Bags of fresh carrots sat for days and were then thrown away. Potatoes just sat on the floor.
Even though he was providing an alternative to the big Tesco and was trying to help local farmers, his set up did not interest many local suppliers because sending over a few bags every week was not worth the effort.
But he did not give up. He went to Tesco and checked out the prices and decided to undercut the superstore on most vegetables.
After failing to interest the local media with his strategy, he put 5,000 leaflets through the doors of neighbours and put a big sign out front stating "Cheaper than Tesco." It worked.
It seems customers do not care where the food originates or who sells it - they want lower prices, period.
On many days Pablo goes to Tesco and does a price check and then shows customers which products are cheaper at his place. On the day we were there, Tesco onions were cheaper and he clearly displayed that.
Now, suppliers gladly deliver whatever he orders. He is selling many more bags of carrots and sacks of potatoes and has added non-grocery items so customers don't have to head up to the superstore for items such as staples, even if they are a little cheaper there.
His business model is simple: Instead of trying to sell (or not) something at a 50 percent mark up, he now sells a whole of something at a 10 percent mark up. He still makes his money, his suppliers are happy, his parking lot is busy and now Pablo is building a summer restaurant on site so people can sit and watch the traffic head up the road to Tesco.
He figures by this summer, he will have nine employees. Nine people who would not have a job if he did not undercut his rival.
Do you have any similar examples where you live? Let us know.
I have never understood the wish to count dollars before bodies. The Australian fires is a good example of this.
With a horrific death toll from hellish fires, the story is awful. I for one will not be worrying about the insurance costs of the fires for the time being. There will be plenty of time to talk about who will foot the bill. Today is not that day.
On the business front , the news is all about Barclays results and the profits announced. Honestly? I don't undertstand them.
I heard on the radio this morning that the devil was in the detail, but never quite realized the devil had such big horns... the top man at Barclays keeps saying 'no' to doing an interview with me. I wonder what he thinks I might ask ?
LONDON, England — I spent an enjoyable day going “back to my roots” for our report on how the UK’s commercial radio sector is coping in the current downturn.
I began my career in radio some 25 years ago and have a lot to thank it for (Heavens! Is it really that long ago? I feel so old. I reported from Stockholm recently and my CNN producer for the trip was born in the year I started working!).
As well as providing me with solid journalistic training and experience, it taught me many of the broadcasting skills I use today here at CNN. For instance, the apparent “effortless” ability to talk about nothing in particular, without a script, at a moment’s notice and for any length of time.
There are of course no pictures to disguise unintentional gaps on radio and, as silence is far from golden, the host has to talk. Thus I learned to think on my feet (in television we call this skill “filling.”). Or the ability to “fill” while someone is counting down to zero through my earpiece and to end a sentence just as the countdown reaches one.
I learned to convey emotion and warmth through my voice and how to read a script out loud without it sounding as though I was reading words on a page. People often remark about the rich quality of my voice, which I can assure you has not been acquired thanks to any of life’s “excesses.” Radio taught me the “singer’s technique” of talking from my stomach. I now do it habitually, which gives my voice the “warmth” that people seem to find attractive.
The UK commercial radio industry seems to be coping pretty well in the current “difficult trading environment.” Some networks, due to their aggressive acquisition strategies and the fact that they have paid a premium for licenses, are saddled with high levels of debt and are finding things particularly tough. There are others in the bigger radio markets like London that are struggling purely because they are competing against so many rival stations. But on the whole, the industry is optimistic that it can see the recession through. Radio advertising is relatively cheap compared with other forms of media and the fact that radio is a medium you use while doing something else means that it complements, not competes with, television, magazines or the net. All this makes it very cost effective from an advertiser's point of view.
We visited just two of Britain’s 300 plus stations for our report: London’s Magic. Flagship of the Bauer media empire’s 25 Magic branded stations and Hertbeat FM, which broadcasts to a small chunk of Magic’s territory to the north of the capital.
Magic is top dog in London with more people listening for longer than any other station. Big, high spending advertisers are keen to be associated with the brand which owes its success to a polished “more music, less talk” format of feel good hits linked by household name presenters. Every song, every ident, every link is planned for maximum impact. The studios are plush and hi-tech and have a very “big media” feel. It’s all very impressive, but somehow rather soulless.
Contrast that with tiny Hertbeat FM, broadcasting from a converted outbuilding at Knebworth House, a stately home famous for the rock concerts held in its grounds. The station gets only the crumbs of the national advertising cake and so relies upon the ad-spend of hard pressed local businesses for its living. But Hertbeat’s very “localness” is the key to its success … “Made in Hertfordshire, not in London” says one of its jingles. Listeners and advertisers alike appreciate the feel-good mix of music and talk about local places, people and issues.
Hertbeat FM’s zoo format breakfast show is the one that blasts my household awake each morning. The music and infectious chemistry between DJ Steve Folland and his co-hosts Chris Hollis and Dawn Easby are popular with the whole family (all three are up-coming stars and I dread the day when they’re snapped up by one of the big networks, as they inevitably will be. Breakfast just won’t be the same without them).
The morning after my report aired on CNN’s Quest Means Business there was a lot of on-air banter and gentle leg pulling about Richard’s larger than life personality. I quickly arranged for Richard to call the Hertbeat studio and there followed one of the funniest and most entertaining pieces of radio I think I’ve ever heard when a grumpy, never at his best in the morning Richard was cajoled into growling the word “sausages.” Afterwards Richard remarked how much he’d enjoyed his live radio appearance. And then he said that he envied the Hertbeat presenter’s freedom. I asked him to explain what he meant. “Their freedom to deviate from the format, dear chap”, he said. “I bet they have a damn sight more fun at work each day than anyone at Magic or the other big stations.”
And I think he’s got a point. Perhaps big is not always best and it’s the more agile, smaller stations with loyal local listeners and advertisers, and less rigid formats, that will come through the recession best.
TOYOTA CITY, Japan — Cecelia Kobashigawa came to the Toyota City job center with four friends. They're all in the same boat – suddenly fired from a Toyota subsidiary due to the global economic slowdown. Her eyes welled up as she told us about her 19-year-old daughter and 15-year-old son and how long they'd survive without her working. "It's so tough," she said, clutching handouts from the center on job leads.
TOYOTA CITY, Japan - On what was to be a historic day, halting all of Toyota's Japanese assembly lines, the automaker announced late in the day it would keep one line running. The late news sent copy editors and reporters to their laptops erasing headlines like "historic shutdown," but it did little to quell the pain for the tens of the thousands of workers idled across Japan as nearly every line stopped producing autos and auto-related equipment.
The scene is quiet these days in Toyota City.
Nowhere is the silence more deafening than in Toyota City, home and birthplace to Toyota Motor Corporation. Factories are shuttered, workers idled, in an attempt to bring production in line with falling global demand.
The day is particularly ominous for assembly line worker Takayuki Yoshikawa, who has already been told he's out of a job and home in May. Yoshikawa resides in a Toyota owned dormitory. "I don't know what to do," says Yoshikawa. "I could go back to my hometown, but there are no jobs there, either."
Toyota, now the world's largest automaker, plans 10 more days like this, spread out over the next two months. Toyota's incoming president, Akio Toyoda, called the current economy "unprecedented, the likes of which haven't been seen in 100 years."
Toyota also says the scheduled assembly line shutdowns are an attempt to save what jobs the automaker can. "The production suspensions scheduled for Japan in February and March is part of our effort to keep production in line with market demand. We are carrying out these suspensions fully aware of the necessity to even out production volumes and maintain employment levels."
Analysts say while painful, these shutdowns may be unavoidable. "Everywhere, almost everywhere, things are getting worse and worse and worse," says Koji Endo, Credit Suisse auto analyst. "Under that kind of circumstance, you have to control your cost. Maybe try to shrink temporarily."
The cost control is having a damaging effect on Toyota City public coffers. The city of 400,000 estimates it will lose 90 percent of its tax dollars as Toyota falls into the red and pays fewer taxes. It comes at a time when Toyota City is seeing historic levels of unemployment. This region, according to Toyota City, carries the dubious distinction of having the highest rate of unemployment in Japan.
Alberto Dilone, already fired from a Toyota parts subsidiary, showed up at the Toyota City job center to search for a new job.
"Kubi," says Dilone, slicing a finger across his throat. Dilone says half the people in his plant have been fired and the jobs in Toyota City are scarce. Like the hundreds of unemployed filtering through the center everyday, he's leaving with no new job leads.
TOKYO, Japan — At the Toyota City job center, today's supervisor, Mr. Kawajiri, is in a mild panic. The number of people who need a job has doubled in just months, and their numbers seem to grow with each passing day. It's hard to keep up, he says, and it's often overwhelming.
This one-industry town has ridden high with Toyota Motor Corporation for decades, exploding in size and wealth. Workers enjoyed lifetime employment with enough cash to care for their entire families.
Town coffers filled with each profit earnings report from the ambitious automaker. That was all before the global economic downturn.
Today, for the first time in the world's biggest automaker's history, all of its Japanese assembly lines sit idle.
The seven Toyota City factories are silent, a deafening sound in this city of 400,000 residents.
Workers who pride themselves on the Toyota philosophy of "kaizen," which means constant improvement, are improving nothing today. They're sitting at home or passing the time in Toyota City's main shopping district.
But no one wants to spend any money, because they're not sure when or if they'll be showing up in Mr. Kawajiri's job center.
"I don't want to complain, but it's hard," says Kawajiri. "I take it day by day, person by person, and try not to think of all the people who are unemployed right now. If I do, it's more than I can handle."
DAVOS, Switzerland - Like all bosses, my editor likes to drop in the really irksome duties on top of those one has already willingly accepted, as if they were nothing to speak of. "Oh yes," she said nonchalantly, "you and Richard have to blog every day while you're in Davos, didn't I tell you?"
CNN's Nicki Goulding displays the work-related injury she received on the nose from her accreditation badge.
Keeping my grumbles to myself ("She expects me to get up at 5, work all day in the freezing cold and write some inane blog?"), I somehow manage to make my irritation look like mild surprise and decide to take the thing in good heart.
Little did I know that by the end of the week, I'd hardly be able to keep my hands off my trusty laptop and digital camera. As I prepare to return home, I have to be honest with myself about my new addiction: parties, hats, pedometers and daughters at Davos have been among the topics I've sounded off on this week.
Luckily for my readers there were also several items that never quite made it into blogdom.
There was going to be one about how Davos seems to produce more paper than ideas. Even before setting out, a huge consignment of documents from the World Economic Forum clunks onto my desk in London. Upon registration, participants are handed a handsome shoulder bag generously pre-packed with ring files, booklets and letters. And since it is impossible to attend every event at the Forum even if it is vitally important to you, progress around the Congress Centre is hampered by omnipresent racks full of press releases, transcripts of keynote speeches and other literature.
The crunch always comes at the end of the week. I have a large suitcase for trips like this, but it always ends up crammed full by the time I've put in all the warm clothing needed to handle broadcasting outdoors at 7 a.m. when the temperature is down to minus 16 degrees centigrade. Sticking in any extra stuff is not an option.
There was also going to be a blog about the mishaps that befell two of my colleagues here. I knew there was a lot of science, sociology and subterfuge associated with the different colored accreditation badges but never realized how downright dangerous they are.
The hazard resides in the piece of elastic you string round your neck, so the thing hangs at roughly the level of your third button down from the top. Security is very big here, and you frequently have to hold your accreditation up to electronic readers that verify your identity - for example, when entering the Congress Centre.
Last night CNN's Nicki Goulding did this a little carelessly, but with the elastic at full stretch the sharp-edged badge slipped from between her fingers, whizzed back and struck a vicious blow to the bridge of her nose.
Ouch. She appeared the next morning looking like she'd been in a fight.
Stepping into her taxi - ordered for 6:30 a.m. - at 6:32 a.m., she was subjected to a torrent of abuse in a language she does not understand. One thing the driver did make clear: She would have to pay more for keeping him waiting. Knowing that prices in Davos are systematically eased skywards when the World Economic Forum is in town, she stood her ground. More abuse, and the driver dropped her past the place she needed to be dropped, forcing her to walk back a couple of hundred yards.
The fact is, there aren't many taxis or taxi companies in Davos, and there is a lot of demand for them during the Forum. It's a seller's market, and first-year undergraduate microeconomic theory prepares you for such behavior. But it is still a pity to meet such a grouch in a country famed for its courtesy and hospitality.
Ho hum. Enough complaining. I'm off to work out a way of squeezing all those precious press releases into my poor old suitcase.
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