Good U.S. Jobs Report Comes With an Asterisk

The economy added 146,000 jobs in November and the unemployment rate fell to 7.7 percent, its lowest level since December 2008, the government said today in a report that was complicated by special factors of weather and politics.

Paul Ashworth, chief U.S. economist for Capital Economics, described the report as “something of a mixed bag” but said “on balance, it’s positive.”

The drop in the jobless rate, from 7.9 percent in October, wasn’t great news because of why it happened: More people dropped out of the labor force so they weren’t counted among the unemployed. The labor-force participation rate remains depressed more than three years after the end of the 2007-09 recession. If it were at normal levels, the unemployment rate would be substantially higher.

Job growth of 146,000, which is calculated from a survey of establishments, was stronger than the 85,000 predicted by economists surveyed by Bloomberg. It was closely in line with the average of roughly 150,000 per month for all of 2011 and 2012. Retail was a big job producer, with 53,000 added to payrolls. Manufacturing employment was roughly flat.

The government revised previous months’ job totals lower. It said September job growth was 132,000 instead of 148,000, and October’s was 138,000 instead of 171,000.

The Bureau of Labor Statistics said that it was able to get good responses to its employment surveys despite Hurricane Sandy, which made landfall in the New York/New Jersey metro area just before Halloween. Still, the destruction wrought by Sandy did disrupt the economy—destroying some jobs while creating others. It affected parts of the U.S. accounting for 16 percent of the nation’s output. Meanwhile, employers may have curtailed hiring plans for fear of a sharp contraction of the economy in January from fiscal cliff spending cuts and tax increases.

The special factors “suggest an asterisk will have to be put alongside the monthly non-farm report,” Bloomberg senior economist Joseph Brusuelas wrote in today’s Bloomberg Economics Brief, before the numbers were released. Likewise, finance blogger Barry Ritholtz wrote before the data release that it “seems especially potentially random.”

Digging into the numbers, the survey of households that’s used to calculate the unemployment rate showed that employment fell by 122,000 (in contrast to the 146,000 increase in the survey of establishments, which is used to calculate the payroll figure). But because the number of people in the labor force fell by 350,000, the unemployment rate also fell.

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Protesters surge around Egypt’s presidential palace

CAIRO (Reuters) – Tens of thousands of Egyptian protesters surged around the presidential palace on Friday and the opposition rejected President Mohamed Mursi‘s call for dialogue to end a crisis that has polarized the nation and sparked deadly clashes.

The Islamist leader’s deputy said he could delay a December 15 referendum on a constitution that liberals opposed, although the concession only partly meets a list of opposition demands that include scrapping a decree that expanded Mursi‘s powers.

“The people want the downfall of the regime” and “Leave, leave,” crowds chanted after bursting through barbed wire barricades and climbing on tanks guarding the palace of Egypt‘s first freely elected president.

Their slogans echoed those used in a popular revolt that toppled Mursi’s predecessor Hosni Mubarak in February 2011.

Vice President Mahmoud Mekky said in a statement sent to local media that the president was prepared to postpone the referendum if that could be done without legal challenge.

The dialogue meeting was expected to go ahead on Saturday in the absence of most opposition factions. “Tomorrow everything will be on the table,” a presidential source said of the talks.

The opposition has demanded that Mursi rescind a November 22 decree giving himself wide powers and delay the vote set for December 15 on a constitution drafted by an Islamist-led assembly which they say fails to meet the aspirations of all Egyptians.

The state news agency reported that the election committee had postponed the start of voting for Egyptians abroad until Wednesday, instead of Saturday as planned. It did not say whether this would affect the timing of voting in Egypt.

Ahmed Said, leader of the liberal Free Egyptians Party, told Reuters that delaying expatriate voting was made to seem like a concession but would not change the opposition’s stance.

He said the core opposition demand was to freeze Mursi’s decree and “to reconsider the formation and structure of the constituent assembly”, not simply to postpone the referendum.

The opposition organized marches converging on the palace which elite Republican Guard units had ringed with tanks and barbed wire on Thursday after violence between supporters and opponents of Mursi killed seven people and wounded 350.

Islamists, who had obeyed a military order for demonstrators to leave the palace environs, held funerals on Friday at Cairo’s al-Azhar mosque for six Mursi partisans who were among the dead. “With our blood and souls, we sacrifice to Islam,” they chanted.

“ARM-TWISTING”

In a speech late on Thursday, Mursi had refused to retract his November 22 decree or cancel the referendum on the constitution, but offered talks on the way forward after the referendum.

The National Salvation Front, the main opposition coalition, said it would not join the dialogue. The Front’s coordinator, Mohamed ElBaradei, a Nobel peace laureate, dismissed the offer as “arm-twisting and imposition of a fait accompli”.

Murad Ali, spokesman of the Brotherhood’s Freedom and Justice Party (FJP), said opposition reactions were sad: “What exit to this crisis do they have other than dialogue?” he asked.

Mursi’s decree giving himself extra powers sparked the worst political crisis since he took office in June and set off renewed unrest that is dimming Egypt’s hopes of stability and economic recovery after nearly two years of turmoil following the overthrow of Mubarak, a military-backed strongman.

The turmoil has exposed contrasting visions for Egypt, one held by Islamists, who were suppressed for decades by the army, and another by their rivals, who fear religious conservatives want to squeeze out other voices and restrict social freedoms.

Caught in the middle are many of Egypt’s 83 million people who are desperate for an end to political turbulence threatening their precarious livelihoods in an economy under severe strain.

“We are so tired, by God,” said Mohamed Ali, a laborer. “I did not vote for Mursi nor anyone else. I only care about bringing food to my family, but I haven’t had work for a week.”

ECONOMIC PAIN

A long political standoff will make it harder for Mursi’s government to tackle the crushing budget deficit and stave off a balance of payments crisis. Austerity measures, especially cuts in costly fuel subsidies, seem inevitable to meet the terms of a $ 4.8-billion IMF loan that Egypt hopes to clinch this month.

U.S. President Barack Obama told Mursi on Thursday of his “deep concern” about casualties in this week’s clashes and said “dialogue should occur without preconditions”.

The upheaval in the most populous Arab nation worries the United States, which has given billions of dollars in military and other aid since Egypt made peace with Israel in 1979.

The conflict between Islamists and opponents who each believe the other is twisting the democratic rules to thwart them has poisoned the political atmosphere in Egypt.

The Muslim Brotherhood’s spokesman, Mahmoud Ghozlan, told Reuters that if the opposition shunned the dialogue “it shows that their intention is to remove Mursi from the presidency and not to cancel the decree or the constitution as they claim”.

Ayman Mohamed, 29, a protester at the palace, said Mursi should scrap the draft constitution and heed popular demands.

“He is the president of the republic. He can’t just work for the Muslim Brotherhood,” Mohamed said of the eight-decade-old Islamist movement that propelled Mursi from obscurity to power.

(Additional reporting by Omar Fahmy; Writing by Edmund Blair and Alistair Lyon; Editing by Giles Elgood)

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‘Borderlands 2,’ ‘Dishonored’ win at Spike VGAs

LOS ANGELES (AP) — The cartoony post-apocalyptic shoot-’em-up sequel “Borderlands 2″ and the stealthy first-person game “Dishonored” were among the early winners at the Spike Video Game Awards on Friday.

“Borderlands 2″ was picked as best shooter and multiplayer game, while “Dishonored” was awarded with the best action-adventure game trophy at the gaming extravaganza.

The ceremony honors outstanding achievements within the gaming industry over the past year.

“The Avengers” star and shooter fan Samuel L. Jackson hosted the 10th annual ceremony at Sony Pictures Studios — his fourth time as the show’s emcee.

This year’s ceremony was scheduled to screen never-before-seen footage from such upcoming titles as “The Last Us,” ”South Park: The Stick of Truth” and “Castlevania: Lords of Shadow 2.” It will also serve as the launch pad for newly announced game “The Phantom Pain.”

For the first time, the VGAs were streamed on Xbox Live, the online service for Microsoft’s Xbox 360 console. During the ceremony, online viewers could vote on show components such as what songs and clips would be played during the ceremony.

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Online:

http://www.spike.com/events/video-game-awards

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Follow AP Entertainment Writer Derrik J. Lang on Twitter at http://www.twitter.com/derrikjlang

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FDA panel opposes recommending painkiller, cites safety

WASHINGTON (Reuters) – A U.S. Food and Drug Administration panel of outside experts voted against recommending Zogenix Inc’s Zohydro painkiller for FDA approval on Friday, citing concerns about the danger of addiction posed by the drug class known as opioids.

But FDA officials said the regulatory agency could still approve the drug for sale in the United States by imposing restrictions to protect public safety.

In an 11-2 vote, advisory committee members said the San Diego-based pharmaceutical company had met narrow FDA targets for safety and efficacy but worried that the drug known generically as hydrocodone bitartrate could become a drug of choice for people addicted to other opioid painkillers including those based on the drug oxycodone.

“The primary thing has to be the public health,” said Dr Judith Kramer of Duke University. “And I don’t see how we can’t see this as a promised repeat performance.”

FDA officials will consider the committee’s recommendation in deciding by March 1 whether to approve Zohydro for sale in the United States for people who require a round-the-clock painkiller for an extended period of time.

Dr Bob Rappaport, director of the FDA’s division of anesthesia, analgesia and addiction products, said regulators must decide whether the panel’s decision was based on a tangible difference between Zohydro and opioid-based medications already available in the marketplace.

Otherwise, he told the panel, “you’re punishing this company and this drug because of the sins of the previous developers and their products. And from a regulatory standpoint, that’s not really something we can do.”

POSSIBLE SALES BOOST

Wall Street analysts say FDA approval could bring Zogenix up to $ 500 million in annual sales from Zohydro by 2019, or more than ten times the pharmaceutical company’s expected 2012 annual revenue of $ 45.5 million.

Trading of Zogenix shares was suspended on Friday because of the FDA hearing. The stock closed at $ 2.36 on Thursday.

Zohydro is a single-entity, extended-release product containing the narcotic painkiller hydrocodone with no other pharmaceutical ingredient such as acetaminophen, which can lead to liver damage if used too often.

“Zogenix recognizes and appreciates that prescription opioid misuse and abuse is a critical issue. However, it is also important to remember that there is a documented patient need for an extended-release hydrocodone medicine without acetaminophen,” the company said in a statement.

“We remain confident in the measures we have proposed to support safe use of Zohydro and are committed to continuing to work with the FDA through the review process to bring this treatment option to this specific patient population,” it added.

Health officials say hydrocodone, the active ingredient in Zohydro, is already the most widely abused drug in an opioid class linked to a prescription drug abuse epidemic that has ballooned over the past 20 years.

Law enforcement officials say prescription drugs now pose a bigger public safety hazard than more traditional narcotics, including heroin and cocaine.

An estimated 7 million Americans abuse pharmaceutical drugs. Prescription drugs account for about 75 percent of all drug-related U.S. overdose deaths, according to the U.S. Centers for Disease Control and Prevention. Three of every four deaths from pills involve opioid pain relievers including oxycodone.

SHARPLY CONTRASTING TESTIMONY

Before voting, the panel heard testimony from more than a dozen public witnesses, including chronic pain sufferers who see drugs like Zohyrdo as needed treatments to control their chronic discomfort and allow them to lead normal lives without endangering their health.

But some speakers before the panel implored the experts not to recommend another potentially addictive opioid.

“Today we have a chance to save people,” said Avi Israel, father of an 18-year-old boy who suffered from Crohn’s disease and committed suicide after becoming addicted to hydrocodone that was prescribed to slow his bowels.

“Ask yourself this question,” he added, “do we really need another narcotic pill to help anybody with pain? We can’t handle what we have.”

Earlier on Friday, the panel conducted separate and sharply divided votes on safety and efficacy.

Committee members voted 9-5 to find that the drug was not safe for treating patients with moderate to severe chronic pain, after voting 7-6 to find the treatment effective against pain. A panel member later changed her vote on efficacy from “no” to “yes,” saying she had made a technical error.

(Editing by Carol Bishopric and Matthew Lewis)

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Office Holiday Parties Are Back, and Just as Weird as Ever

The corporate holiday party is a night when everyone’s supposed to pretend there are no organizational charts, no office hierarchies. Interns can kick back with the bosses—and theoretically do more intimate things with them—and the next morning everyone’s just supposed to snap back into normal behavior, hangovers be damned.

During the boom years, startups and other profligate spenders would blow colossal amounts on these events, which were as much about chief executive ego and coolness as employee morale. That’s still happening to some extent: In 2010, the Blackstone Group (BX) rented out the Sackler Wing of the Metropolitan Museum of Art; the party centered around cutting a mammoth cake with the word “accountability” emblazoned on top. In 2011, Bridgewater Associates, a hedge fund famous in part for its parties, rented out a 10,000-seat arena for a holiday bash; while details were kept under wraps, past events have included mud wrestling. Billionaire Paul Tudor Jones, of Tudor Investment, puts on an annual light show (the “Jones-a-Palooza”) synchronized to music at his estate in Greenwich, Conn. Are the parties any less awkward for their extravagance? Not really. Even the greenest 22-year-old attendees sense they’re witnessing something unsustainable—a lot of someone’s venture capital being tossed into a fire pit.

In the cold December after the financial crisis of 2008, many companies decided to go the other way, skipping the party entirely. The employee-retention rationale kind of goes out the window when jobs are scarce and nobody is likely to leave anyway. Above the Law, a popular blog about the legal world, recently opined that big firms would be better off forgoing their joyless parties and parceling out the entertainment budget in the form of $ 100 gift cards to employees. Ho, ho, ho.

Some years back, I worked for a corporation whose stock price was slowly sinking, and I watched each December as the party budget withered away. First, spouses were knocked off the list; then many unrelated divisions of the company were all invited to one shared event; then, finally, the thing was canceled altogether.

Holiday parties are back, if not quite in full force. Even now that the economy is marginally better, throw a party that’s one iota nicer than your staff might expect, and it’s certain that some Grinch will mutter, “I’d rather have had a raise this year.” Battalia Winston, a firm that does an annual survey of corporate merriment, is reporting the first uptick since the crash: 91 percent of companies plan to give a party this year, the most since 2007 and a big bump from the 74 percent figure (a 25-year low) of 2011. Anthony Patrone, co-owner of a Brooklyn party-planning company called Ultra Events & Staffing, says he’s definitely noticed an improvement: “December’s always busy, but many more businesses are asking about rates this year. People are saying ‘enough is enough.’ ” David Stark, a top event planner who runs David Stark Design & Production in Brooklyn, also points to the microtrend of “corporations giving their money to Sandy relief instead of throwing the blowout bash.” Do-gooderism is a neat inoculation against employee grumpiness: They can’t complain about that.

Many parties this year will hit a middle ground between opulent and, well, nonexistent, but that won’t make them any less strange. Consider those held in the office itself. Getting hammered on the premises feels transgressive, whether it is or not. There’s actual science behind that: One British study led by the school of psychology at the University of Birmingham found that drinking in an unusual setting—the conference room, say, as opposed to your local pub—does in fact get you drunker, because your brain compensates for lowered inhibition better in familiar surroundings.

Then there are the hookups. Stark recalls one big corporate event at which he encountered “sex in a bathroom, with vomiting right before they vacated the room.” There’s also the experience of learning that your co-worker, to whom you have barely spoken two words all year, is getting a divorce/having money problems/hates the boss. A survey by Caron Treatment Centers, a drug- and alcohol-treatment service, reveals that fully one quarter of all partygoers have heard someone overshare. Puke notwithstanding, isn’t this all starting to sound like a bit of a blast?

The best thing that ever happened to a holiday party, in my experience, turned out to be its cancellation. After the old employer mentioned above turned austere, our boss said, “Oh, I’ll host something myself,” and had us all over to her house. One senior staffer mixed up gallons of very strong margaritas; three of us prepped hundreds of hors d’oeuvres. The outsiderness of the thing gave it back to us. It was no longer a line in the budget, and an assistant finished out the evening pantsless and asleep in the bathtub. It was the weirdest, warmest party—work-related or not—I can remember attending.

Bonanos is a Bloomberg Businessweek contributor.

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Toronto mayor to stay in power pending appeal of ouster

TORONTO (Reuters) – Toronto Mayor Rob Ford can stay in power pending an appeal of a conflict of interest ruling that ordered him out of his job as leader of Canada’s biggest city, a court ruled on Wednesday.

Madam Justice Gladys Pardu of the Ontario Divisional Court suspended a previous court ruling that said Ford should be ousted. Ford’s appeal of that ruling is set to be heard on January 7, but a decision on the appeal could take months.

Justice Pardu stressed that if she had not suspended the ruling, Ford would have been out of office by next week. “Significant uncertainty would result and needless expenses may be incurred if a by-election is called,” she said.

If Ford wins his appeal, he will get to keep his job until his term ends at the end of 2014. If he loses, the city council will either appoint a successor or call a special election, in which Ford is likely to run again.

“I can’t wait for the appeal, and I’m going to carry on doing what the people elected me to do,” Ford told reporters at City Hall following the decision.

Ford, a larger-than-life character who took power on a promise to “stop the gravy train” at City Hall, has argued that he did nothing wrong when he voted to overturn an order that he repay money that lobbyists had given to a charity he runs.

Superior Court Justice Charles Hackland disagreed, ruling last week that Ford acted with “willful blindness” in the case, and must leave office by December 10.

Ford was elected mayor in a landslide in 2010, but slashing costs without cutting services proved harder than he expected, and his popularity has fallen steeply.

He grabbed unwelcome headlines for reading while driving on a city expressway, for calling the police when a comedian tried to film part of a popular TV show outside his home, and after reports that city resources were used to help administer the high-school football team he coaches.

The conflict-of-interest drama began in 2010 when Ford, then a city councillor, used government letterhead to solicit donations for the football charity created in his name for underprivileged children.

Toronto’s integrity commissioner ordered Ford to repay the C$ 3,150 ($ 3,173) the charity received from lobbyists and companies that do business with the city.

Ford refused to repay the money, and in February 2012 he took part in a city council debate on the matter and then voted to remove the sanctions against him – despite being warned by the council speaker that voting would break the rules.

He pleaded not guilty in September, stating that he believed there was no conflict of interest as there was no financial benefit for the city. The judge dismissed that argument.

In a rare apology after last week’s court ruling, he said the matter began “because I love to help kids play football”.

Ford faces separate charges in a C$ 6 million libel case about remarks he made about corruption at City Hall, and is being audited for his campaign finances. The penalty in the audit case could also include removal from office.

(Reporting by Claire Sibonney; Editing by Janet Guttsman, Russ Blinch, Nick Zieminski; and Peter Galloway)

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Apple, Samsung spar in court, ruling to come

SAN JOSE, California (Reuters) – Apple Inc and Samsung Electronics squared off again in court on Thursday, as the iPhone maker tried to convince a U.S. district judge to ban sales of a number of the South Korean company’s devices and defended its $ 1.05 billion jury award.

Apple scored a sweeping legal victory in August at the conclusion of its landmark case against its arch-foe, when a U.S. jury found Samsung had copied critical features of the iPhone and iPad and awarded it damages.

Both sides re-convened on Thursday. U.S. District Judge Lucy Koh listened to a range of arguments on topics from setting aside the jury’s findings on liability to alleged juror misconduct and the requested injunction.

The hearing concluded with Koh promising to rule at a later date.

Twenty-four of Samsung’s smartphones were found to have infringed on Apple’s patents, while two of Samsung’s tablets were cleared of similar allegations.

Koh began by questioning the basis for some of the damages awarded by the jury, putting Apple’s lawyers on the defensive.

“I don’t see how you can evaluate the aggregate verdict without looking at the pieces,” Koh said.

Samsung’s lawyers argued the ruling against it should be “reverse engineered” to be sure the $ 1.05 billion was legally arrived at by the jury and said that on that basis, the amount should be slashed. Apple countered that the ruling was reasonable.

“Assuming I disagree with you, what do I do about Captivate, Continuum, Droid Charge, Epic 4G, and Gem?” Koh asked Apple’s lawyers, referring to the jury’s calculation of damages regarding some of Samsung’s devices.

FIERCEST RIVAL

Samsung is Apple’s fiercest global business rival and their battle for consumers’ allegiance is helping shape the landscape of the booming smartphone and tablet industry — a fight that has claimed several high-profile victims, including Nokia.

While the trial was deemed a resounding victory for Apple, the company has since seen its market value shrink as uncertainty grows about its ability to continue fending off an assault by Samsung and other Google Inc Android gadgets on its home turf.

Apple’s stock has nosedived 18 percent since the August 24 verdict, while Samsung’s has gained around 16 percent.

Most of the devices facing injunction are older and, in some cases, out of the market.

Such injunctions have been key for companies trying to increase their leverage in courtroom patent fights.

In October, a U.S. appeals court overturned a pretrial sales ban against Samsung’s Galaxy Nexus smartphone, dealing a setback to Apple’s battle against Google Inc’s increasingly popular mobile software.

Some analysts say Apple’s willingness to license patents to Taiwan’s HTC could convince Koh it does not need the injunction, as the two companies could arrive at a licensing deal.

Apple is also attempting to add more than $ 500 million to the $ 1 billion judgment because the jury found Samsung willfully infringed on its patents. A Samsung lawyer argued against willful damages and said the base amount for calculating any potential willful damages should be just $ 10 million.

Samsung wants the verdict overturned, saying the jury foreman did not disclose that he was once in litigation with Seagate Technology, a company that Samsung has invested in.

“He should have been excused for cause,” said Samsung lawyer Charles Verhoeven. “Such a juror was a juror in name only.”

The juror misconduct charge is “unlikely to have much traction,” said Christopher Carani, a partner at Chicago-based intellectual property law firm McAndrews, Held & Malloy, Ltd.

Both Apple and Samsung have filed separate lawsuits covering newer products, including the Samsung Galaxy Note II. That case is pending in U.S. District Court in San Jose and is set for trial in 2014.

(Reporting By Noel Randewich; Editing by Kim Coghill)

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Comedian Katt Williams a no-show at arraignment

SEATTLE (AP) — Comedian Katt Williams didn’t show up at an arraignment hearing in Seattle to face assault charges stemming from several run-ins with people and police last weekend.

Williams’ attorney, Thomas McAllister, told the judge Thursday that his client was under the impression that he didn’t have to attend the hearing, citing information from a Seattle Times article. McAllister says Williams is back in California.

The Times reports (http://bit.ly/VJzMhX ) that the judge rescheduled the hearing for next week.

Authorities say Williams struck a man over the head with a microphone while performing Friday night, threw chairs at fans, and threatened a bar manager with a pool cue over the weekend.

Authorities say officers had to restrain Williams before he was taken into custody after the bar incident.

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Information from: The Seattle Times, http://www.seattletimes.com

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Beyond mobile: Telcos hook up hospitals, cars and coffeemakers

BARCELONA (Reuters) – In Barcelona’s Hospital Del Mar, Telefonica is doing more than connecting phone lines – it is also developing a lucrative new business keeping patients’ hearts in good shape.

A heart-monitoring program put in place by Telefonica is just one kind of machine-to-machine (M2M) technology that telecom operators are racing to develop for sectors including healthcare, automotive, transportation and energy.

Carriers such as Vodafone, Deutsche Telekom, AT&T, Verizon, China Mobile, and France Telecom are betting that M2M will be a significant source of growth as the number of connected devices climbs to 12 billion or more by 2020.

In cars, for example, mobile technology can be used to automatically call emergency services after a road accident. In offices, France Telecom uses it to tell companies when their coffee machines need re-stocking, while energy companies are equipping homes with ‘smart meters’ to track consumption and permit differential pricing.

The potential prize is billions of dollars in new business for telecom groups, many of which are otherwise faced with declining sales, and the promise of big cost savings for their customers.

Yet turning the ‘Internet of Things’ into a real business will not be easy for big telcos, since the market is far more complicated than their traditional sales of mobile and Internet contracts to consumers and companies.

To succeed, they have to develop an understanding of a range of industries, their specific needs and regulatory constraints. They also have to outfox a phalanx of new competitors such as start-ups in Silicon Valley, app developers, and corporate giants like IBM, General Electric and Philips.

Analysts’ forecasts vary widely on the size of the M2M market and how much of it telcos can win, since the biggest opportunity comes not from putting a mobile SIM card in devices but from providing the software and services to make them work.

Machina Research predicts revenue of 714 billion euros ($ 933 billion) by 2020 for M2M overall. Informa Telecoms & Media’s Jamie Moss says the market is growing slowly and will reach 217 million connections and $ 9.3 billion for telcos by end 2014. They earned $ 5.7 billion from M2M this year, dwarfed by the roughly $ 1.14 trillion from mobile services in the same period.

“I am very convinced that M2M will be a profit driver,” said Matthew Key, who heads Telefonica’s digital unit, which aims to earn 500-800 million euros in annual M2M revenue by 2015.

“But we need to sell more than just basic connectivity by adding know-how and a complete service, and build the business locally step by step.”

NEW TERRITORY

The opportunity and the challenges for telcos in M2M are on display at the Hospital Del March

Every morning, patients recovering from heart attacks use equipment installed in their homes by Telefonica to weigh themselves, take their blood pressure and answer a few questions on their symptoms via a touch screen. The information is transmitted to nurses at the seaside hospital’s cardiac unit who follow up by phone if they have any concerns.

The program has had a positive effect on mortality rates, reduced hospital visits and saved 9,000 euros per cardiac patient since it began two years ago, according to doctors.

Nurse Ana Linas said the system was so simple to use that an illiterate elderly woman was among the patients able to use it.

Yet the hospital, which experienced some video connectivity problems that were quickly resolved by Telefonica, has no plans to expand the project because of the costs involved.

“You have to hire trained people so that it all works. Although costs fall a lot later on, the initial investment is high in staff and equipment,” said doctor Cristina Enjuanes.

With budgets under pressure and doctors often reluctant, getting the investment needed to roll out telehealth schemes can be an uphill struggle.

Telefonica wants to roll out the heart-monitoring program elsewhere in Spain and is also investing heavily in projects in Britain with the National Health Service.

“I cannot tell you when it will ramp up. What I can feel is that we are getting closer to it … We will know soon the speed at which demand will move, and whether there is finally an opportunity to create a totally new (business) category,” said Jose Perdomo, head of Telefonica’s e-Health division.

Telefonica has had more success rolling out e-health in Latin American markets such as Brazil and Chile, where more medical care is provided via the private sector than in Europe.

CARS AND HOMES

The M2M gold rush has sent some telcos on the acquisition trail to get technology and expertise. AT&T bought U.S. start-up Xanboo and has used its technology to develop security services for the home, as well as tools for homeowners to control their heating, lighting and appliances from a mobile phone.

Verizon paid $ 612 million in June for Hughes Telematics and plans to build on the company’s expertise in M2M software for tracking truck fleets, as well as crash detection, emergency calling, and maintenance needs for cars. Hughes has a worldwide contract with Volkswagen and a U.S. contract with Mercedes.

John Stratton, Verizon’s vice-president for enterprise, said the Hughes deal would allow it to gain know-how in the software needed to boost the profitability of M2M contracts beyond the few dollars earned from the connection itself.

“If we only transport the bits of data in M2M projects, that has relatively modest value, less than 10 percent of the market opportunity overall,” he said in an interview.

“The next big piece is the solutions on top, which is what motivated us to buy Hughes.”

Korea Telecom’s experience launching a taxi fleet management service powered by M2M technology demonstrates the point. Initially it earned about $ 5 a month per taxi for tracking taxi locations with mobile technology. It boosted that to $ 50 per month and signed five-year instead of two-year contracts by selling a software platform and call center as a package with the taxi tracking.

Telefonica invested 2 million euros in a Spanish start-up called addFleet that makes a free taxi-calling app for consumers, and a paid version for taxi owners to track cars.

“There is no global market for taxi cabs, so you need to go local first,” said Telefonica Digital chief Key.

Martin Garner, an analyst at consultancy CCS Insight, said telecom operators would have to adapt if they are to succeed in making M2M a mass technology, adding that for now the market was growing slower than they would have hoped.

“We do think there is a big world in M2M for the telcos,” said Garner. “But they have to go and take it: it will not come to them.”

($ 1 = 0.7652 euros)

(Additional reporting by Harro Ten Wolde, Robert-Jan Bartunek and Roberta Cowan; Editing by Will Waterman)

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Trains fiasco ‘to cost taxpayer’

6 December 2012 Last updated at 20:43 ET

The collapse of the £5bn West Coast Main Line deal will bring “a significant cost to the taxpayer”, a National Audit Office report has found.

The government scrapped its decision to award the franchise to FirstGroup in October, owing to faulty calculations.

It has already estimated the cost of reimbursing four firms for the cost of their bids would be £40m.

The NAO said costs for staff, advisers, lawyers and the two reviews into the fiasco added up to a further £8.9m.

A separate independent report published on Thursday found there was a “damning failure” by the Department for Transport (DfT) which led to ministers – who had not been told about flaws in the bidding process – awarding the contract after being given inaccurate reports.

The mistakes came to light after rival bidder Virgin Trains, which had run the West Coast Main Line since 1997, launched a legal challenge against the decision.

The report by Sam Laidlaw – chief executive of Centrica, the owner of British Gas – found department officials wrongly calculated the amount of risk capital bidders would have to offer to guarantee their franchise proposals.

‘Lamentable failures’

NAO head Amyas Morse said cancelling a major rail franchise competition at such a late stage was “a clear sign of serious problems”.

“The result is likely to be a significant cost to the taxpayer,” he went on.

Mr Morse said the failure of essential safeguards raised questions about the DfT’s broader management approach, as well as the West Coast episode.

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The total cost to the taxpayer of putting it right is currently unknown but is likely to be significant”

End Quote Margaret Hodge MP

But he commended the department’s efforts to be open about what happened, and to investigate further once the problems with the bidding process had been uncovered.

Commenting on the report, House of Commons Public Accounts chairman Margaret Hodge MP said the DfT’s handling of the case had been “a first-class fiasco”.

“It has left the government’s entire policy on rail franchising in disarray, as a further three competitions have had to be put on hold,” the Labour MP for Barking said.

“The total cost to the taxpayer of putting it right is currently unknown but is likely to be significant.”

Transport Secretary Patrick McLoughlin said the NAO findings mirrored those of the Laidlaw inquiry report.

He said the government was already taking “swift action” to ensure that future franchise competitions were “conducted on the basis of sound planning, the rigorous identification and oversight of risk, and the right quality assurance”.

“I believe the plans we are putting in place to ensure future franchise competitions are conducted on the basis of sound planning, the rigorous identification and oversight of risk, and the right quality assurance, will prevent a repeat of these lamentable failures,” he went on.

On Thursday morning, Mr McLoughlin announced that Virgin Trains would continue running the service until 9 November 2014 when a new long-term franchise would begin.

BBC News – Business

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