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The Digital Economy is driving sector and industry transformations 25 May 2015

Key Insights

Based on the growth of internet and mobile users alone, it is hardly any wonder that e-commerce and m-commerce are thriving. Despite the economic downturn, online spending is proving resilient and even buoyant in most markets. New communication and software developments are making it increasingly possible for retailers to offer a seamless shopping experience using all the available shopping channels – mobile devices, computers, bricks-and-mortar, television, radio, direct mail, catalogues, and so on. In our existing climate of digital interaction, the concept of a ‘Sharing Economy’ is gaining momentum. New developments are following in the footsteps of those entrepreneurs who created sites where people share their houses and car spaces. We are now increasingly seeing sites aimed at people who need people for odd jobs, at short notice. Uber was perhaps the first on the scene here. It is still operating in a narrow market (taxies), but other companies are entering the much broader job market, by using e-commerce, offering business opportunities to increasing larger groups of people.

Mobile shopping is one of the hottest topics, and the m-commerce market is growing at a staggering rate. While this boom will of course taper off eventually, m-commerce will remain one of the leading growth areas for some years, driven by the younger generation and its mobile-centric lifestyle. With consumers relying more and more on their smartphones when shopping online, m-commerce will continue to grow faster than overall e-commerce, therefore accounting for an ever-increasing portion of the e-commerce market.

The enormous success of m-commerce is linked to apps, which are becoming more and more popular. Apps are convenient, safe, quick, and simple to use. In the global m-commerce market, shoppers are already using apps in preference to browsers. Increasingly, commercial models will be linked to these apps – which will lead to further spectacular growth in m-commerce. BuddeComm sees the development of m-wallet apps, in particular, as a major breakthrough for the m-payment sector.

The digital economy has brought about huge changes in the publishing industry – from digital printing presses, to indie authorship, to e-books. One of the downfalls is that self-publishing has become too easy, so that the market is flooded with low quality, poorly edited books. This has given self-published e-books a bad press. The dilemma is a thorny one, with many different interests at war. In the end, the consumer must be the one to rebalance the market.

In early 2015, the press was filled with reports that the physical book market had made a comeback and that e-books had had their day. But according to statistical data, while sales of print books rose slightly in 2014, e-book sales rose even more, further increasing their share of the overall book market.

Advertising and Marketing in the Digital Age

The advertising scene has undergone radical change and is still changing. With profits down between 5% and 10% on an annual basis, the performance of the traditional advertising market is under constant pressure. Data analytics is exposing the weakness of these traditional advertising business models and, like all of the other sectors affected by the digital economy, this means that these business models need to change. As they become more aware of the power of big data, advertisers are demanding hard, quantitative data on their campaigns. Increasingly, campaigns are now linked to outcomes. These are predetermined and tested against the results, and payments are made to advertising agencies based on the success of these campaigns, which are becoming far more cost-effective.

Social media companies are becoming increasingly important website publishers. Compared to commercial broadcasters, these companies have one important difference – they have valuable data on their consumers, which they are monetising in a big way. Although consumers are happy to share data with companies operating in the digital economy, they are most unhappy when these companies disrespect their wishes for privacy. On the other hand, many companies involved in big data analytics are disappointed with the results. So a better system could be a win-win situation for both the demand and the supply side.

Online Retailing

While online sales have been growing at around 20-30% annually, the overall market share was still under 10% of the overall market in early 2015. Many users cite the reasons of availability, convenience and pricing as well as delivery options as some of the reasons for purchasing online.

There are many choices from offshore e-tailers offering low cost deliveries, with onshore businesses that operate a retail web presence providing service and communication at a local level. Low start-up costs and minimal barriers to entry have seen many enterprises including bricks and mortar stores and online only stores successfully operating in the direct sales to consumers market.

E-Banking

Australians are one of the world’s biggest users of online banking. EFT (electronic funds transfer) is very popular in Australia, and the BPAY consortium, owned by Australia’s Big Four banks, is widely used to pay bills. However, the more consumer-driven developments such as m-banking took longer to emerge. After decades of procrastination, and ultimately pushed by development from companies such as Apple and Google, the era of m-payments has now taken off in a big way, with all four banks now facing breakneck growth in m-payments. Further expansions are expected in other sectors of m-banking as smartphones and tablets are quickly becoming customers’ preferred way to interact with their banks. By the end of 2015 it is expected that m-banking will have overtaken the online banking in the number of transactions done electronically.

For detailed information, table of contents and pricing see: Australia – E-Commerce, Marketing and Advertising



International connectivity crucial for Samoa’s future 23 May 2015

Two companies compete in Samoa’s mobile market: BlueSky Samoa and Digicel Samoa. This has resulted in a dynamic, competitive mobile sector, with one of the highest rates of mobile phone coverage in the Pacific region. Since mobile networks were upgraded to enhanced 3G technology, the spread of mobile internet is in part filling the digital gap, but smartphones and mobile data plans are still too expensive for many Samoans, and download speeds are slow.

Besides mobile telephony, internet provision and international gateway services are also conducted in a competitive environment. However, BlueSky Samoa remains the only provider of fixed-line telephony and ADSL services. Competition in this area is difficult to achieve due to the small size of the market.

Fixed-line internet access remains severely underdeveloped, with an estimated 1% penetration, due to various factors such as expensive bandwidth, poor fixed-line infrastructure, and the general challenges faced by a small, developing, and remote market.

Although Samoa – unlike most Pacific islands – has an international submarine cable connection, the network has limited bandwidth and is insufficient for the country’s needs. This has resulted in poor, sometimes interrupted internet access.

However, there is growing consumer awareness of ICT products and services. Social networking sites such as Facebook and YouTube are becoming increasingly popular, particularly with the younger generation.

The key to improving telecom services in Samoa lies in resolving the issue of international connectivity. More bandwidth would increase internet speed and reduce the exorbitant price of broadband access. It would also enable VoIP to become a viable option, which in turn would reduce international call prices and allow competition in the international voice market. Options being considered include new-generation satellite solutions and submarine cables projects.

For detailed information, table of contents and pricing see: Samoa - Telecoms, Mobile and Broadband - Market Insights and Statistics



Estonia’s Baltic Highway cable providing additional capacity to central and western Europe 22 May 2015

Estonia’s telecom market has benefited from a range of regulatory measures which have encouraged competition and helped reduce services prices for consumers. The dominance of the incumbent Eesti Telekom has been eroded in recent years. Fixed-line infrastructure has been upgraded and is geared towards offering mobile backhaul as well as broadband services and bundled offerings. The government has promoted a public-private partnership to build a national fibre-based NGN to deliver 100Mb/s to all premises.

Estonia’s mature mobile market has particularly high SIM card penetration for the region. Services are offered by the MNOs EMT, Elisa and Tele2 which have all invested in technologies to underscore the growing mobile broadband sector. Recent trials of LTE-A have provided data at up to 300Mb/s. By mid-2015 LTE coverage effectively matched that of existing 3G networks, so supporting the growing adoption of mobile content and applications. These developments are expected to underpin future revenue growth in the sector.

Broadband in Estonia is available via a range of fixed-line and wireless technologies, with ADSL2+, FttP, cable, WiFi, WiMAX and HSPA/LTE options widely available. The telecoms incumbent Eesti Telekom, operating under the Elion brand, is the dominant provider of DSL services, with cable broadband the main competing platform. Widespread broadband usage has underpinned Estonia’s emerging internet economy, with various e-commerce, e-government, e-education and e-health services available and widely used. The cable TV market is well developed and hence cable TV operators have been well-positioned to offer bundled services.

A new BuddeComm report provides an overview of Estonia’s fixed-line, IT and broadband markets. It assesses the strategies of the largely international players in the market, as well as recent regulatory developments, and the status of fixed-line networks and the developing NGN. It also includes a range of performance and financial data and estimates. The report also reviews the mobile market as players further develop the mobile data sector. It covers major players, regulatory developments, technologies deployed and services offered as well as a range of updated operating statistics.

For detailed information, table of contents and pricing see: Estonia - Telecoms, IP Networks, Digital Media and Forecasts



Integrated care and medicine 22 May 2015

An element that is often overlooked in the e-health debate is that it has as much to do with interconnected care as it has to do with the delivery of services.

For e-health to work there needs to be a horizontal interconnection between patients, clinicians, nurses, parents, carers and health workers. Unfortunately healthcare is one of the most siloed sectors, where collaboration across these various people is very hard to achieve. If it happens at all it is done manually through case managers, and obviously only in specific cases since it is expensive and very complex, and requires a high level of physical cooperation.

Increasingly the patient’s home will become the central point from where that interconnection with others will take place.

Integrated systems will become available across the full healthcare system – coordinated by the ICT functions of e-health. This will create a far more interactive system whereby the focus will shift from ‘things done to the patient’ to interactive participation. Over time this could change the healthcare sector to a wellness sector.

In Australia there is additional complexity as the different sectors are managed by different levels of government and through different investment regimes, with different reporting systems, computer systems, administration regulations, each looking after certain sections – and in the case of the states even different systems per region.

The GPs are managed federally, while the hospitals are managed and financed through the states. Most countries have a far more centralised system – for example, in the USA, where such integration is in place, there is a far more developed e-health system. It is also interesting to see that with such a system in place private industry and insurance companies are driving e-healthcare, recognising the enormous cost savings that can be achieved through that approach.

Rather than increase taxes or co-payments the government should look at reducing costs as it is very clear that the healthcare system in Australia is unnecessary costly. Unfortunately the political will to change this is very low and it will be slow process.

It looks as though technology will move faster than politics and it will be interesting to see what some of the most advanced interactive developments such as genomics will do to speed up more integrated medicine and integrated care.

With the enormous pressure of rapidly increasing costs, cloud computing is making equally swift advances, and again this has the potential to increase interactivity between the various elements of the healthcare system, as business intelligence and data analytics are also going to revolutionise the management and administrative side of the sector.

Talking about bypassing the slow-moving systems, there are already more than 100,000 health and wellness smartphone/tablet/wearable applications, and patients are increasingly asking their doctors to take the data that they collect about themselves into account. This is still only happening sporadically, but there is an interesting app in San Francisco that links doctors with apps to patients with apps and, while the service is not covered under the health insurance, it is already proving to be a success. Part of the service is that doctors will do house calls.

Paul Budde

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OTT and WiFi buoy the mobile broadband boom 21 May 2015

Mobile broadband access using the 3G and now the 4G/LTE networks has continued to expand as users continue to add tablets, modems and phones to use alternative communication methods and cloud based services. In the longer term, with the increase in connected devices and the increased availability of mobile devices such as tablets and smartphones, the amount of mobile data downloaded is likely to at least double yearly for the next few years.

Long-Term Evolution (LTE) – or 4G – represents an important growth opportunity for the mobile industry, and operators around the world are investing heavily in rolling out the technology. In fact, LTE network deployment may turn out to be one of fastest technology migrations ever seen. In LTE’s favour is the fact that it allows operators a smooth migration from both legacy 3GPP and non-3GPP systems.

With competitively priced services, innovative smartphones, and an increasing range of apps, mobile broadband traffic will continue to escalate. While the capacity of the mobile network is greatly improved by LTE – as well as by increasing spectrum allocation, the physics of mobile technology is such that it will be impossible to handle all the traffic of these mobile devices over the mobile network, and an increasing portion will have to be offloaded onto fixed networks. Thus, developments in LTE will stimulate the need for fibre broadband.

LTE systems were designed primarily for data communications and do not have the circuit switched capability of previous mobile generations – therefore, on their own, LTE networks do not allow for voice or SMS. In order to offer these services, VoLTE solution need to be added to the LTE network.

With the improved coverage and penetration of LTE as well as the massive adoption of smartphones, VoLTE has become a priority throughout the world for operators that wish to bring HD voice service to their LTE customers. Nevertheless, while VoLTE services certainly offer opportunities, Over-The-Top (OTT) mobile VoIP services will attract the largest revenue market shares, at least in the short and medium term.

In fact, mobile VoIP has been skyrocketing, with millions of users around the world subscribing to one or more of the many OTT companies offering mobile VoIP apps and services. While a few forward-looking mobile operators understand the importance of accepting and even encouraging OTT services, some incumbents are applying pressure on regulators to restrict mobile VoIP. Others operators, especially in the more developed markets, are competing directly with OTT players by launching their own VoLTE services.

The global smartphone market has slowed from its boom years to a more modest but still significant growth. With mature markets becoming increasingly dependent on replacement purchases rather than on first-time buyers, the industry is shifting its attention to emerging countries in Asia, Latin America, and Africa, where much of the population either does not own a mobile phone or has yet to move from feature phone to smartphone.

Although Samsung and Apple remain the leading smartphone suppliers globally, their market share is being eroded by lower-priced phones from China. Moving beyond their vast domestic market, several Chinese brands are expanding internationally, especially to India and southern Asia.

A major threat to the smartphone business arises from the limitations of the mobile broadband infrastructure. The mobile industry can develop all of these new applications and services, but if the infrastructure cannot handle the capacity, there will be little use for them. Developed markets are eating up new spectrum with a voracious appetite. WiFi could be a good customer access alternative.

A remarkable development in the WiFi market is the massive proliferation of community hotspots, also known as homespots. Globally, in just a few years, they have grown to an estimated 53 million – by comparison, commercial hotspots, which have been around for much longer, only number 8 million.

The popularity of the homespot model reflects the growing trend towards a ‘sharing economy’, where digital technology is used to empower individuals and enable them to share excess capacity in goods and services.

Fon, the pioneer of the dual SSID router for community WiFi networks, is the global leader, but other companies have followed Fon’s example and launched their own dual access WiFi systems, for example Free in France, Comcast in the US, and Liberty Global’s European subsidiaries.

In 2015, wearable technology has become a thriving industry, with an ever-broadening range of possible uses and devices, including smart watches, glasses, clothing items, skin patches, and even implants for health monitoring.

Thanks to improvements in sensor technology and apps, together with consumer adoption of smart technologies generally, smart watches are becoming increasingly popular. Since Google launched its Android Wear operating system for wearable devices in mid-2014, more and more manufacturers are starting to offer smart watches paired with smartphones – and as mobile operators begin to offer these smart watches as part of bundled packages, we see the market moving towards mainstream.

The global digital media entertainment market continues to go from strength to strength in 2015. This highly competitive industry sector is flourishing on the back of improved mobile and broadband infrastructure and consumers continue to embrace being entertained and connected via gaming, social media, video streaming and music. Advertising models are expanding in order to capture revenue from an industry where direct revenue-generating business models are not well received by the broader public.

The next step in mobile broadband is 5G – and the 5G technology is now well and truly under development. While there are no firm standards in place, the industry is working hard at making that happen. In the meantime, the early movers are testing their own versions of the 5G technology and this is giving us information about what we can expect – what the technology will be able to deliver.

Commercial 5G is not expected to become available in any significant way until around 2020, with full deployment expected towards the end of that decade.

BuddeComm’s new report, Global Mobile Broadband – a Trailblazing Market – Insights and Statistics, provides important insights into the worldwide mobile broadband industry and includes trends, analyses, statistics and case studies. It provides insights into the fast growing LTE network deployment and the subsequent emerging VoLTE sector, and it offers a glimpse into the future with the latest advances in 5G technology. It explores the popular OTT mobile VoIP industry and the growing importance of WiFi to the telecoms sector. Supported by insights and statistics on mobile broadband apps this report also provides valuable information at a regional level including North America, Europe, Middle East, Latin America, Africa and Asia Pacific, written by BuddeComm’s Senior Analysts. Please note: Mobile communications is covered in detail in a separate annual publication.

For detailed information, table of contents and pricing see: Global Mobile Broadband - a Trailblazing Market - Insights and Statistics



Vodafone Australia's mobile-only strategy limiting growth 20 May 2015

In recent years Vodafone Group has successfully expanded its interests from mobile voice and data services to a full quad-play offering. This is an obvious strategy to enable large international operators to compete with one another for customers who are increasingly fluid in the use of multiple platforms for their telecom and media services needs.

In the UK, Vodafone launched a quad-play offering as early as 2011, relying on BT Wholesale for the fixed-line components of voice, broadband and IPTV. Since then the company has invested heavily in Europe's fixed-line sector. In Greece, Vodafone owns the largest ISP Hellas Online (HOL). In Germany, Vodafone acquired Kabel Deutschland (KDG) in October 2013 for €7.7 billion, fending off a counter bid from Liberty Global. The move firmed up Vodafone’s strategy of migrating its business away from pure mobile telephony to offering full bundled services.

Vodafone's fixed-line ambitions are particularly notable in Spain. The company paid €7.2 billion to acquire the country's largest cableco Ono in July 2014. At the time, Vodafone had  already teamed up with Orange in a €1 billion joint fibre network covering 50 of the largest cities. The network is scheduled to pass six million premises by 2017. With complementary footprints, the fibre is owned independently though the companies share technical specifications to ensure compatibility as a single network. Each operator provides access to its own section, making the entire network available to the other. Following the Ono acquisition, Vodafone is providing Orange with wholesale access to one million homes using the Ono network.

Vodafone's latest results show how the company is integrating these various assets to its benefit through cost reductions and efficiencies. In Germany, Vodafone is busily migrating mobile backhaul to KDG's fibre infrastructure, while its own DSL subscriber base has been integrated with that of KDG. KDG reported 450,000 new internet subscribers in the year to March 2015, as well as 224,000 new premium TV subscribers. In Spain, Vodafone now has 2.81 million broadband subscribers, while Ono's fibre infrastructure connects over 500 mobile base stations, so avoiding backhaul costs. In all, Vodafone's European NGN (combined FttP, cable and fibre/VDSL) now reaches 50 million premises, of which 28 million are on its own infrastructure and 22 million through wholesale agreements.

The contrast with Vodafone Australia (VHA) is stark. In this market, where the local operation is 50% owned by Vodafone Group, the CEO recently reiterated that the company has no plans to enter the fixed-line sector. Instead, it is channelling investment to upgrade existing networks. The company is at a formidable disadvantage, on several levels. Customers are still leaving, though not at the alarming rate seen in most quarters during the last two years. Vodafone pointedly did not bid for 700MHz spectrum when this came to auction in 2013. As a result, Optus an Telstra between them secured the 60MHz available in this band, paying some A$1.95 billion. Since early 2015 Telstra and Optus have been able to make use of their 700MHz concessions. Although Vodafone is emphasising its metro coverage with LTE using existing 800MHz and 1800MHz holdings, Optus and Telstra have national ambitions (98% population coverage by late 2017). As the paucity of Vodafone's LTE reach becomes increasingly evident in the wake of continuing customer migration from 3G to LTE, further churn to Vodafone's competitors must be anticipated.

Without a fixed-line network in Australia, VHA cannot hope to capitalise on customer attraction to bundled services. Optus and Telstra both have extensive fixed-line infrastructure, and both are well positioned to exploit the efforts of NBN Co to extend the reach, and capabilities, of copper. Both companies came to an agreements with NBN Co in December 2014 to incorporate their copper and HFC assets  within the NBN. NBN Co now plans to connect another 1.5 million premises with HFC within a couple of years. These premises are passed by Telstra and Optus infrastructure, but not connected. In addition, NBN Co hoped to trial DOCSIS 3.1 technology, potentially in 2017.

Thus Optus and Telstra are well positioned to be retail ISPs on this upgraded and extended IP network. Vodafone is the weaker of the three, in mobile assets as well as fixed-line. If Vodafone will not enter the fixed-line business despite the opportunities, it may be that the larger fixed-line players, in an increasingly consolidated market, will try to acquire Vodafone itself, and so add mobile voice and data to their existing offerings. This would provide Australia with three competing quad players with national reach.

Henry Lancaster

For more detail see: Vodafone Australia Australia - Telco Company Profiles - Telstra, Optus, Vodafone and NBN Co Australia - Mobile Communications - Operator Analyses and Industry Overview United Kingdom - Mobile Market - Insights and Statistics Spain - Broadband Market - Insights, Statistics and Analysis Germany - Broadband Market - Insights, Statistics and Analysis



Positive environment for Jordan’s mobile and broadband markets 20 May 2015

Jordan has a very progressive telecoms market and in 2015 mobile broadband took a further step when 4G LTE services became available. Zain Jordan was the first operator to be awarded a 4G license and has installed over 1000 sites. Orange Jordan also plans to offer 4G services in mid 2015 after being awarded a license in January.

Despite being halted a few times for financial reasons; Jordan’s National Broadband Network (NBN) appears to be underway again due to funding from the Gulf Cooperation Council and a tender process which will see operators committed to completing the project in two years. Currently around 35% of the NBN is thought to be deployed.

The combination of a potentially robust national broadband network and the new 4G LTE services provides a positive environment in Jordan for telecoms growth. Smartphone uptake remains strong with an affordable second-hand market ensuring the devices are reaching a large demographic.

With mobile voice revenue growth less likely in this maturing market; the launch of 3G/HSPA networks has underpinned dramatic growth in mobile broadband. Jordan’s mobile broadband sector has around 2.3 million active subscribers in 2015 and this in turn is stimulating the growth of mobile apps, especially those based on messaging and social networking.

Competition in the mobile market is intense, and mobile penetration levels have surpassed 100% although multiple SIM card ownership is common. The introduction of higher mobile taxes in the past couple of years did not please Jordan’s major operators, which include Zain Jordan, Orange Jordan and Umniah – and this change has been partly blamed for the declining revenues reported in 2013 and again in 2014.

For detailed information, table of contents and pricing see: Jordan - Telecoms, Mobile, Broadband and Forecasts



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