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Pandemic hits Comcast 2Q; new Peacock service has 10M users

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Pandemic hits Comcast 2Q; new Peacock service has 10M users

NEW YORK (AP) — The coronavirus pandemic took a toll on Comcast in the second quarter as movie theaters closed, theme parks shut down and advertisers cut back.

The company reported Thursday that its NBCUniversal TV, film and theme park divisions, as well as its Sky unit in Europe, all suffered steep drops in revenue in the April-June quarter.

But period was not all grim news. The Philadelphia-based company added U.S. internet customers and 10 million people have signed up for its new Peacock streaming service since April. Peacock is free for Comcast customers and has been available to them since April, but opened to the general public, with a much-promoted free tier, on July 15. Comcast has said it hopes to have 30 million to 35 million users by 2024.

That is where the focus was on Wall Street, and shares rose almost 4% before the opening bell.

Comcast’s other entertainment divisions showed how the pandemic has hit its business. NBCUniversal revenue fell 25% to $6.12 billion. NBC reopened Universal Studios Japan and its Universal park in Orlando, Florida, in early June, despite a surge of cases in Florida. Disney’s Florida park also reopened this month. The theme park business shrank to $87 million in revenue from $1.46 billion a year ago.

The movie division’s revenue fell 18% to $1.19 billion. The pandemic has upended the movie business, shutting down Hollywood production and the distribution of films. Comcast struck an industry-changing deal with AMC on Tuesday that will let it offer its movies to customers at home much faster — after just 17 days rather than three months.

Meanwhile, advertising revenue for NBC’s cable networks, like Bravo and USA Network, fell 27% to $679 million; for the broadcast networks NBC and Telemundo, it dropped 28% to $959 million.

And cable video customers continued to shrink, extending a long-running cord-cutting trend, with sports on hold because of the pandemic. Comcast lost 477,000 video customers. It’s lost 887,000 video customers in the first six months of 2020, more than double the amount shed in the same period last year.

At the same time, it’s continuing to gain internet customers, and added 323,000 in the most recent quarter and 800,000 in the past six months, up from 584,000 in the first half of 2019.

Broadband has become a requirement for the many people working and studying from home. Comcast isn’t counting 600,000 customers who are on a free promotion for low-income people or who have halted payments because of financial difficulties stemming from the pandemic and its economic fallout.

The cable and home internet division’s revenue was roughly unchanged at $14.43 billion.

Revenue fell 15.5% to $4.08 billion in Comcast’s Sky division in Europe, which encompasses a broadcasting business, TV packages, home internet and cellphones.

Overall, Comcast’s net income fell 4.4% to $2.99 billion, or 65 cents per share. Stripping out one-time items, earnings were 69 cents per share. Wall Street analysts expected 55 cents, according to FactSet.

Revenue slid 12% to $23.72 billion. Analysts predicted $23.58 billion.

By TALI ARBEL AP Business Writer.

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Huawei: Smartphone chips running out under US sanctions

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Huawei Smartphone chips running out under US sanctions

BEIJING (AP) — Chinese tech giant Huawei is running out of processor chips to make smartphones due to U.S. sanctions and will be forced to stop production of its own most advanced chips, a company executive says, in a sign of growing damage to Huawei’s business from American pressure.

Huawei Technologies Ltd., one of the biggest producers of smartphones and network equipment, is at the center of U.S.-Chinese tension over technology and security. The feud has spread to include the popular Chinese-owned video app TikTok and China-based messaging service WeChat.

Washington cut off Huawei’s access to U.S. components and technology including Google’s music and other smartphone services last year. Those penalties were tightened in May when the White House barred vendors worldwide from using U.S. technology to produce components for Huawei.

Production of Kirin chips designed by Huawei’s own engineers will stop Sept. 15 because they are made by contractors that need U.S. manufacturing technology, said Richard Yu, president of the company’s consumer unit. He said Huawei lacks the ability to make its own chips.

“This is a very big loss for us,” Yu said Friday at an industry conference, China Info 100, according to a video recording of his comments posted on multiple websites.

“Unfortunately, in the second round of U.S. sanctions, our chip producers only accepted orders until May 15. Production will close on Sept. 15,” Yu said. “This year may be the last generation of Huawei Kirin high-end chips.”

More broadly, Huawei’s smartphone production has “no chips and no supply,” Yu said.

Yu said this year’s smartphone sales probably will be lower than 2019’s level of 240 million handsets but gave no details. The company didn’t immediately respond to questions Saturday.

Huawei, founded in 1987 by a former military engineer, denies accusations it might facilitate Chinese spying. Chinese officials accuse Washington of using national security as an excuse to stop a competitor to U.S. tech industries.

Huawei is a leader among emerging Chinese competitors in telecoms, electric cars, renewable energy and other fields in which the ruling Communist Party hopes China can become a global leader.

Huawei has 180,000 employees and one of the world’s biggest research and development budgets at more than $15 billion a year. But, like most global tech brands, it relies on contractors to manufacture its products.

Earlier, Huawei announced its global sales rose 13.1% over a year ago to 454 billion yuan ($65 billion) in the first half of 2020. Yu said that was due to strong sales of high-end products but gave no details.

Huawei became the world’s top-selling smartphone brand in the three months ending in June, passing rival Samsung for the first time due to strong demand in China, according to Canalys. Sales abroad fell 27% from a year earlier.

Washington also is lobbying European and other allies to exclude Huawei from planned next-generation networks as a security risk.

In other U.S.-Chinese clashes, TikTok’s owner, ByteDance Ltd., is under White House pressure to sell the video app. That is due to fears its access to personal information about millions of American users might be a security risk.

On Thursday, President Donald Trump announced a ban on unspecified transactions with TikTok and the Chinese owner of WeChat, a popular messaging service.

By JOE McDONALD AP Business Writer.

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As Trump digs in, will it be US versus China in tech?

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As Trump digs in, will it be US versus China in tech

NEW YORK (AP) — President Donald Trump’s bans on two popular Chinese social media apps — TikTok and WeChat — are the latest moves in an escalating U.S.-China rift, and point to a future where technology and innovation are increasingly walled behind political barriers.

In China, the Communist Party has long limited what foreign tech companies can do. It blocks access to major U.S. internet services, like Google and Facebook, along with thousands of websites operated by news organizations and human rights, pro-democracy and other activist groups.

Those restrictions have helped nurture homegrown tech giants that in recent years have started expanding, and even dominating, outside China.

Now the U.S. and other countries are putting their own limits on China.

The executive orders from the White House are vague. But experts said they appear intended to bar TikTok and WeChat from the app stores run by Apple and Google when the orders take effect in 45 days. That would make them more difficult to use in the U.S.

“This is a pretty broad and pretty quick expansion of the technology cold war between the U.S. and China,” said Steven Weber, faculty director for the University of California, Berkeley Center for Long-Term Cybersecurity.

The Trump administration has been hawkish against China. A big example is Huawei, the world’s biggest maker of smartphones and network equipment, and China’s first global tech brand. Washington has moved to cut off Huawei Technologies Ltd.’s access to chips and other technology, tried to push allies away from Huawei and barred U.S. government funds from being used to pay for Huawei equipment in U.S. networks, citing security concerns.

The Trump administration has also blocked Chinese buyers from acquiring U.S. companies.

Now it’s going after popular services used by millions globally. The effort is driven not only by security concerns but also Trump’s anger at Beijing, blaming China for the coronavirus pandemic and for hurting his re-election chances, according to two White House officials not authorized to speak publicly about private deliberations.

“We are entering an era of an increasingly bifurcated internet, where it may become more difficult for Chinese information companies to succeed outside of China,” said Lindsay Gorman, a fellow specializing in emerging technologies at the Alliance for Securing Democracy.

China’s so-called Great Firewall has allowed Chinese internet powerhouses like e-commerce giant Alibaba, social media company Baidu and WeChat owner Tencent, which makes most of its money from online games and entertainment in China, to amass hundreds of millions of users — in some cases over a billion. For context, Facebook says it has more than 3 billion users across its various apps, including Instagram and WhatsApp and Messenger.

But Bytedance’s TikTok has run into obstacles outside China. In the U.S., where TikTok says it has 100 million users, it may have to sell to Microsoft because of the U.S. government’s national-security concerns. China’s authoritarian government can demand access to data from companies, a concern that has also dogged Huawei. TikTok maintains that it does not share user data with the Chinese government nor censor content at its request. It suggested it would sue to make sure it and its user were “treated fairly.”

WeChat, which has more than 1 billion users, is less well-known than TikTok to Americans without a connection to China. Mobile research firm Sensor Tower estimates about 19 million U.S. downloads of the app. But it is crucial infrastructure for Chinese students and residents in the U.S. to connect with friends and family in China, as well as for anyone who does business with China.

Within China, WeChat is censored and expected to adhere to content restrictions set by authorities. The Citizen Lab internet watchdog group in Toronto says WeChat monitors files and images shared abroad to aid its censorship in China.

“A U.S. ban of on WeChat would deepen the split between the United States and China on a human level by removing the de facto channel of communication for the Chinese diaspora,” said Gorman.

Tencent also owns Riot Games, publisher of hit video game League of Legends, and has a big stake in Epic Games, the company behind video game phenomenon Fortnite. It also has a streaming deal with the NBA.

It’s not clear what will result from Trump’s executive orders, how WeChat and TikTok users will be affected, whether Tencent’s other operations are at risk, or whether there is legal authority for what Trump wants to do.

More actions against Chinese technology companies may be coming from the U.S. and other countries, analysts say. China has a reputation for economic espionage and China-backed hackers have been blamed for breaches of U.S. federal databases and the credit agency Equifax.

“I think we’ll only see even further attempts by the U.S. to ban or prohibit Chinese products, services and investment,” said Andy Mok, senior research fellow at the Center for China and Globalization in Beijing. He noted U.S. Secretary of State Mike Pompeo’s statement this week of wanting a “clean” internet and networks free of Chinese influence.

India has also blocked a slew of Chinese services, citing privacy concerns, amid a border standoff. The U.K. reversed plans for Huawei in its new high-speed mobile phone network. It said U.S. sanctions made it impossible to ensure the security of equipment made by the Chinese company.

“You start wondering what will happen in terms of globalization, both economically and politically, if we have every country having completely separate networks, with completely different technology economies, access to information and social spheres,” said Tiffany Li, a visiting professor at the Boston University School of Law.

The Chinese foreign ministry accused Washington of “political manipulation” but did not indicate how Beijing might respond. Still, the ruling party has used the entirely state-controlled press to encourage public anger at Trump’s actions.

“I don’t want to use American products any more,” said Sun Fanyu, an insurance salesperson in Beijing. “I will support domestic substitute products.”


By ZEN SOO and TALI ARBEL AP Technology Writers.
Soo reported from Hong Kong. AP reporters Aamer Madhani in Chicago, Barbara Ortutay in Oakland, California, Frank Bajak in Boston, Joe McDonald in Beijing, Jonathan Lemire in Bridgewater, New Jersey, and Mae Anderson in New York contributed to this report.

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Trump bans dealings with Chinese owners of TikTok, WeChat

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Trump bans dealings with Chinese owners of TikTok, WeChat

NEW YORK (AP) — President Donald Trump has ordered a sweeping but unspecified ban on dealings with the Chinese owners of consumer apps TikTok and WeChat, although it remains unclear if he has the legal authority to actually ban the apps from the U.S.

The twin executive orders issued Thursday — one for each app — take effect in 45 days. They say they are necessary because the China-owned apps “threaten the national security, foreign policy, and economy of the United States,” and call on the Commerce Secretary to define the banned dealings by that time. While the wording of the orders is vague and appears to have been rushed out, some experts said it appears intended to bar the popular apps from the Apple and Google app stores, which could effectively remove them from distribution in the U.S.

“This is an unprecedented use of presidential authority,” Eurasia Group analyst Paul Triolo said in an email. At a minimum, he said, the orders appear to “constitute a ban on the ability of U.S. app stores run by Apple and Google to include either mobile app after 45 days.”

Triolo said the orders may face legal challenges and warned that Beijing is likely to “react harshly, at least rhetorically.” Trump’s orders cited legal authority from the International Emergency Economic Powers Act and the National Emergencies Act.

The action is the Trump administration’s latest attempt to hobble China, a rising economic superpower. Over the past several years, it has waged a trade war with China, blocked mergers involving Chinese companies and stifled the business of Chinese firms like Huawei, a maker of phones and telecom equipment. China-backed hackers, meanwhile, have been blamed for data breaches of U.S. federal databases and the credit agency Equifax, and the Chinese government strictly limits what U.S. tech companies can do in China.

Election-year politics in the U.S. are fanning the flames, as Trump appears to be using friction with China to drum up voter support.

Both Republican and Democratic lawmakers share concerns about TikTok running from its vulnerability to censorship and misinformation campaigns to the safety of user data and children’s privacy. But the administration has provided no specific evidence that TikTok has made U.S. users’ data available to the Chinese government. Instead, officials point to the hypothetical threat that lies in the Chinese government’s ability to demand cooperation from Chinese companies. 

Earlier in the week, Trump threatened a deadline of Sept. 15 to “close down” TikTok unless Microsoft or another company acquires it, a threat the new executive order appears to formalize. On Wednesday, U.S. Secretary of State Mike Pompeo announced an expansion of the U.S. crackdown on Chinese technology to include barring Chinese apps from U.S. app stores, citing alleged security threats and calling out TikTok and WeChat by name.

TikTok did not reply to queries. Tencent and Microsoft declined to comment.

“The U.S. thinking is that anything that is Chinese is suspect,” said Andy Mok, a senior research fellow at the Center for China and Globalization in Beijing. “They’re being targeted not because of what they’ve done, but who they are.” 

Leading mobile security experts say TikTok is no more intrusive in its harvesting of user data and monitoring of user activity than U.S. apps owned by Facebook and Google.

“I am the first to yell from the rooftops when there is a glaring privacy issue somewhere. But we just have not found anything we could call a smoking gun in TikTok,” mobile security expert Will Strafach told The Associated Press last month after examining the app. Strafach is CEO of Guardian, which provides a firewall for Apple devices.

The order doesn’t seem to ban Americans from using TikTok, said Kirsten Martin, a professor of technology ethics at the University of Notre Dame. She added that such an order would be nearly impossible to enforce in the first place.

“If goal is to get teenagers to stop using TikTok, I’m not sure an executive order will stop them,” she said. “Every teenager knows how to use a VPN (a virtual private network). They will just pretend they are in Canada.”

And it would be difficult to prohibit people from using the apps if they already have them, even if an app-store ban went into effect, said Vanderbilt University law professor Timothy Meyer. 

TikTok, known for its short, catchy videos, is widely popular among young people in the U.S. and elsewhere. It is owned by the Chinese company ByteDance, which operates a separate version for the Chinese market. TikTok insists it does not store U.S. user information in China, instead caching it in the U.S. and Singapore, and says it would not share it with the Chinese government.

TikTok says it has 100 million U.S. users and hundreds of millions globally. According to research firm App Annie, TikTok saw 50 million weekly active users in the U.S. during the week of July 19, the latest available figure. That’s up 75% from the first week of the year.

WeChat and its sister app Weixin in China are hugely popular apps that incorporate messaging, financial transfers and an array of other services, and claim more than one billion users. Around the world, many people of Chinese descent use WeChat to stay in touch with friends and family and to conduct business in mainland China. 

Within China, WeChat is censored and expected to adhere to content restrictions set by authorities. The Chinese government Citizen Lab internet watchdog group has said WeChat monitors files and images shared abroad to aid its censorship in China.

The order against Tencent could have ramifications for users beyond WeChat, which is crucial for personal communications and organizations that do business with China. Tencent also owns parts or all of major game companies like Epic Games, publisher of Fortnite, a major video game hit, and Riot Games, which is behind League of Legends.

“This is a pretty broad and pretty quick expansion of the technology Cold War between the U.S. and China,” said Steven Weber, faculty director for the Berkeley Center for Long Term Cybersecurity. Weber added that “there is a plausible national security rationale” for the orders.

As president, Trump has frequently taken the unusual step of provoking confrontations, often of a personal nature, with specific companies, both American and foreign.

___

By TALI ARBEL AP Technology Writer

AP reporters Barbara Ortutay in Oakland, Calif., Mae Anderson in New York, Frank Bajak in Boston and Zen Soo in Hong Kong contributed to this article.

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