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Biggest threat to NBN is political panic 24 Oct 2014
Is Malcolm Turnbull now in a similar position to the one Stephen Conroy found himself in back in 2009?
At that time – under the pressure of destructive political opposition from Tony Abbott, who threatened to kill the NBN – certain regrettable political decisions were made. These would have been unnecessary if there had been bipartisan support, the normal state of affairs in relation to telecoms policies around the globe.
Are we now facing a similar situation – this time as a result, not of political opposition, but of the political reality that the model being promoted by the current government is not going to work certainly not in the way the Minister had envisaged. This realisation could easily generate political panic, which could see this government making decisions that will be regretted later and will again slow the country down on its desperately needed path of digital economic and social transformation.
The government needs the cooperation of Telstra to push the multi-technology mix (MTM) through. That might not be a problem in itself, but Telstra is a business, not a political party, and it knows that the MTM is very complex and that this will not be the final solution – everybody involved in the NBN agrees that FttP is the end solution.
So how do you build a model that facilitates MTM and allows for FttP migration, but at the same time does not include a return to the original NBN plan, which was aimed at doing the whole project right in the first place by going straight to a solution with FttP in mind?
Our interpretation is that, like most of Australia, Telstra prefers a model with a clear FttP end result. But for political reasons (to avoid a so-called backflip) the current government doesn’t want such a model. So it needs to concoct one around MTM, but one that at the same time does not obstruct a move towards full FttP.
Telstra is in the middle of this. In order for it to build the MTM solution – it is the only one in the country who can effectively do that – it will need to make strategic decisions that require a range of conditions and concessions from the government. Key among these will be:
- That the government takes care of all the financial risks linked to the MTM model – Telstra certainly doesn’t want to pay for all the surprises that will arrive once building an MTM is started. So it will need plenty of financial guarantees and concessions from the government beforehand.
- As the government will be reluctant to pay more money to Telstra it might want to seek compensation through regulatory concessions, and that is something that could further undermine the already weak competition in the Australian telco market.
- Telstra also will think of its own business future, so in one way or another the deal needs to incorporate the fact that FttP will eventually be needed; so they need to have a path forward within that MTM plan.
- Telstra also needs to be protected against the change of political direction that most certainly would arise if a new government were to come up with yet another plan. It might even try to force the government to obtain bipartisan support for the plan – which, of course, would be a brilliant idea.
- The government needs to introduce new legislation and regulation aimed at ensuring a competitive telco environment in Australia – and this will need to be balanced against the concessions that Telstra requires.
- Telstra, being aware of the FttH end-goal, will want to use the new opportunity given by the government to separately start rolling out new fibre networks itself, to multi-dwelling units and other premises under new regulations that are being worked out. The government and Telstra will have to figure out how this will fit in the overall MTM plan.
- With the MTM plan and Telstra’s role in it, the structural separation issues should be reviewed by the government. The situation has changed; Telstra will not be faced with structural separation for much longer now. This is causing renewed concern within the industry. On the other hand, Telstra would want to receive a guarantee that it won’t be structurally separated.
The panic reaction could be that the above is all too complicated and that the government needs a win on the NBN, especially when the next election is getting closer. It could be forced to give Telstra concessions that would undermine competition. It is obvious that the political price of voter dissatisfaction is greater than less competition, and that therefore a short-term, short-sighted solution could emerge from such political panic.
A worrying thought here is that the government’s harsh criticism of the ACCC and its threats to reform the industry regulator might have something to do with this. The ACCC would be a serious obstacle to its providing concessions to Telstra that would undermine competition in the market.
It is good to see that the industry has finally woken up. We called for this to happen a few months ago. The industry is becoming more vocal on the issue; however it is telling that the Minister has so far failed to acknowledge, let alone address, these issues.
Technologies that are shaping the Digital Economy 22 Oct 2014
Cloud Computing and Big Data
Already more than a decade ago BuddeComm started talking about the great potential of Application Service Providers (ASPs) but, together with the data centres, they were dunked in the dotcom crisis. Even then we indicated that the concept was sound and that it had great potential.
Now over a decade later they are back, but this time under the name of cloud computing. This term describes the shift towards providing virtual data processing, communications and software services to a customer’s location from a variety of different places.
The development of cloud computing takes the form of a business transition and company strategies and policies will need to be changed before its potential can be monetised by businesses. A key factor here is that organisations will have to lift ICT from the level of an infrastructure issue to that of a business opportunity. Cloud computing will need to be seen as a valuable business tool – one that will differentiate the company from others.
However, in order to successfully implement cloud computing far more robust infrastructure is required than what currently is available. The NBN could provides that robust infrastructure needed for high-speed information processing, distributed computing as well as many other applications that can be processed, analysed and managed – all in real time over a cloud computer based IT platform. However, this will to a large extend depend on what quality the NBN will deliver. Capacity, robustness, reliability, low latency, affordability and security will all be crucial and far more attention needs to be given to this infrastructure in order to ensure that these new large-scale developments can indeed be implemented across the economy.. This is of national importance. So while cloud computing will have a golden future its implementation will be more gradual over a larger number of years.
Also here a rather slow start, we have been supportive of the data centre market since the 1990s. However, it took nearly 20 years for the industry to reach its current position. The arrival of high-speed broadband networks allowed for a large range of new services and applications, especially aimed at small and medium organisations.
The data centre market includes telehousing facilities, co-location facilities, cloud and IT services, content hosting, connectivity and interconnection. They are important for a range of business and government applications including new developments of cloud computing and the Internet of Things (M2M).
The NBN in Australia has given an enormous boost to the data centre market, with investments totalling $5 billion over the 2011-2016 period. Currently the developments are highly centralised in the capital cities, but a more decentralised trend is expected to develop over time.
This report overviews the different forms of data centres, the growth of neutral facilities, and gives an insight into the size of the general data centre market, the trends occurring in it, and the major players in the sector. Of the major players the role of the telcos is included and a number of smaller independent providers are profiled.
Wearable technology emerged as a hot topic over the last couple of years and the interest in this sector continues to grow in 2014. Led mostly by wearable fitness trackers; the wearable devices market is quickly moving towards mainstream as mobile operators begin to offer smart watches and fitness trackers as part of bundled packages. Smart watches, augmented reality glasses; fitness activity trackers and home and remote patient monitoring devices are examples of wearable devices and innovative devices and concepts are continuously emerging ranging from Smart glasses to assist with jet lag to smart rings that do your bidding with just a gesture.
While the success and failure of the various individual devices is yet to be decided; there is general consensus that the wearable technologies trend is here to stay and will attract billions in spending in the coming years.
This report provides overall global statistics and trends for the wearable technologies market, supported by examples where applicable.
M2M and The Internet of Things
With the NBN and LTE now well and truly underway it is important to look at what will be the real value of this new infrastructure.
The infrastructure that is now being built offers a range of features such as ubiquitousness, affordability, low latency, high speed and high capacity. It will link millions of devices, such as sensors, that will enable us to manage our environment, traffic, infrastructures, and our society as a whole much more efficiently and effectively.
This ‘Internet of Things’ – other names used include: M2M, Pervasive Internet and Industrial Internet - is going to be a real game-changer. It will transform every single sector of society and the economy and it will be out of this environment that new businesses – and indeed new industries – will be born. This is one of the reasons so many overseas ICT companies are increasing their presence in Australia. The LTE will take a leadership role in the development of M2M but the NBN is also an ideal test-bed for such developments. A great deal of attention is being paid to cloud computing and the NBN can be viewed as one gigantic cloud.
The number of connected M2M devices will grow to somewhere between 25 million and 50 million by 2020.
The connected home covers many areas, from data, video and audio delivery, through to smart appliances, security and home automation. While the technologies in these domains have both existed and evolved for many years, implementing connected home solutions has traditionally been costly and complex.
People are becoming more connected, with an ever-increasing number using broadband, wider and deeper uptake of tablets, smartphones and a range of other devices, and the services.
The ‘Broadband Connected Home’ can be viewed as a fixed location/premise where a number of devices share a connection to the outside world. It is recognised that there can be multiple separate networks within the home, and also multiple points of connection to the Internet.
For detailed information, table of contents and pricing see: Australia - Cloud Computing, Data Centres and M2M
Over-The-Top services model is a key development for e-commerce sector 20 Oct 2014
Over-The-Top (OTT) is the services model for the future for communications and media services, as well as a whole range of emerging ones, such as e-commerce, m-commerce, e-health, e-education, smart grids and the digital economy in general. While the rise of OTT services has created serious concerns for the traditional telecoms operators - it has also created an environment for innovation and alternative services to grow.
Mobile commerce is one of the hottest sectors right now and the industry is finally coming into its own due to the rise of OTT services and app stores offering more digital channels for e-retailers to reach audiences. The growth of smart phones has also assisted the growth of m-commerce along with improvements in mobile infrastructure in many parts of the world. Players are slowly becoming lured into entering the mobile commerce market by the huge revenue opportunities and the potential for customer acquisition and retention.
The enormous success of smart phones is linked to the apps which are available and commercial models will be increasingly linked to these apps - which will result in further spectacular growth in m-commerce. BuddeComm sees the development of m-wallets and m-payment systems based on Near-Field Communication (NFC) as a key development for the m-commerce sector and beyond.
While a range of niche market applications will become successful; there is currently a lot of confusion and uncertainty regarding which ones will succeed - and who will make money from particular mobile e-commerce applications. Sales of entertainment based mobile apps are very popular and improved infrastructure such as fibre and 4G network rollouts is helping to drive the overall global digital media entertainment market. Incorporating social networks, online video, digital music, gaming apps and online dating; this sector is particularly driven by the uptake in mobile broadband apps and services.
In 2014 it is interesting to observe the developments occurring with the virtual currency Bitcoin. While there are security concerns regarding this growing form of Internet cash; in recent times faith in this crypto currency appears to have strengthened and we saw the emergence of the Bitcoin wallet called Coinbase. Significantly, PayPal announced a partnership with Coinbase in 2014 that would see the currency accepted by sites which offer PayPal through its subsidiary Braintree. Bitcoin is certainly gaining awareness and a perception of legitimacy around the globe.
Omni channel retailing in another emerging trend. New communication and software developments make it increasingly possible for retailers to offer a seamless shopping experience using all the available retail channels such as mobile internet devices, computers, bricks-and-mortar, television, radio, direct mail, catalogues and so on. However the level of sophistication needed to build omni-channel systems makes it difficult for many smaller organisations to keep up with the trend. This will result in a wider gap between those who are able to transform themselves and those who will be left behind. As in many other markets, well-functioning omni-channel systems can easily operate internationally, so national boundaries are becoming less of a barrier for those who want to explore overseas markets.
Given the ongoing industry developments combined with increasingly sophisticated technology advancements; the e-commerce and m-commerce sectors must represent one of the most innovative and rapidly evolving sectors worldwide and the speed that new services, features and companies appear (and disappear) is quite a spectacle to observe.
BuddeComm’s new report, Global Digital Economy – The Rapidly Evolving E-Commerce and M-Commerce Markets, provides important insights into how the telecoms industry transformation and growth of Over-The-Top (OTT) services has both impacted upon the digital economy and the telcos. This unique report includes information and statistics on the global e-commerce, e-payments and m-commerce markets; mobile location based services and apps based on entertainment. In addition the report provides insights and statistics on the global digital advertising sector which provides a valuable source of revenue to many of those operating in the digital media sector. Insightful regional overviews written by BuddeComm’s Senior Analysts are provided for North America, Europe, Africa, Middle East, Latin America and Asia Pacific.
For detailed information, table of contents and pricing see: Global Digital Economy - The Rapidly Evolving E-Commerce and M-Commerce Markets
Government initiates plans to develop fixed-line telephony competition in Algeria 16 Oct 2014
With a fixed-line penetration of around 8% and mobile penetration close to 100%, Algeria has one of the highest telecom services teledensities in Africa. The country’s relatively well developed infrastructure includes a national fibre backbone and significant FttP deployments.
There remains no effective competition in the fixed-line sector since Lacom (a joint venture between Egypt’s Orascom Telecom and Telecom Egypt) exited the market in 2008. The proposed privatisation of Algerie Telecom has been in abeyance for some time. To stimulate the sector the government in late 2014 proposed reintroducing fixed-line telephony competition.
Solid mobile subscriber growth in recent years has meant that mobile penetration has now broached 100%. Given the intensifying price competition between the three MNOs, Algerie Telecom’s Mobilis, Orascom’s Djezzy, and Wataniya’s Ooredoo, their focus has shifted to raising ARPU and investing in mobile data services based on HSPA and LTE technologies. Following long delays, the regulator in late 2013 finally issued 3G licences, which together with LTE services launched by Mobilis in May 2014 will considerably boost mobile broadband services in coming years.
Although the mobile market has been affected by the recent social and political unrest, and investor confidence has been dented by recent moves from the government to take control of the country’s leading mobile operator, with the advent of 3G licences the MNOs have the chance to transform themselves into converged service providers and to take a share of the broadband market. As such, the country’s mobile market still has enormous potential for growth.
To complement mobile broadband services, Algerie Telecom has invested in DSL and WiMAX network upgrades. The liberalisation of the market for VoIP services has also enabled ISPs to become players in the sector, which is placing greater pressure on fixed-line voice services. Algerie Telecom is also investing in its national fibre infrastructure, and has become a major shareholder in a four-company national fibre project.
A new BuddeComm report reviews Algeria’s fixed-line, broadband and mobile markets, providing analysis and key statistics, profiles of the major players, and scenario forecasts.
For detailed information, table of contents and pricing see: Algeria - Telecoms, Mobile and Broadband - Market Insights and Forecasts
UN Broadband Commission 2.0 14 Oct 2014
Back in late 2009 I had the honour of explaining my views on how broadband can deliver social and economic benefits to countries and their people to Dr Hamadoun Touré the Secretary-General (SG) of the ITU, the UN body looking after global telecoms. He showed a particular interest in the initiative Australia had taken in developing the NBN.
This discussion with the SG led to the establishment in 2010 of the UN Broadband Commission, co-sponsored by UNESCO and the ITU. Dr Touré invited 50 Commissioners from around the world to participate in this initiative, half of them from private industry – CEOs from leading operators, OTTs and ICT vendors, etc, plus ministers of communications, regulators such as FCC, SGs from other UN bodies such as WTO, World Bank and others.
At the end of 2014 Dr Touré will step down as SG of the ITU. The 10th meeting of the Commission in New York in September therefore also signified the end of an era for the Commission and we had a strategic review of its future. Based on its successful activities – more than a dozen reports and an increase in National Broadband Plans from 65 to 142 – as well as the work that still lies ahead of us, it was decided to launch the Broadband Commission 2.0 under the new SG of the ITU Houlin Zhao, once he is officially elected in November.
How to overcome government inertia?
Key issues that will need to be addressed in the next phase include that of national government inertia in regard to policy-making.
We have seen enormous private investment in the developing world over the last decade; there is also great enthusiasm from the people about ICT. However governments are lacking action in those markets not organised by the private market, such as healthcare, education, infrastructure and so on. The ICT industry is perhaps the largest economic and social incubator for innovations and inventions, but so far we have failed to invent new government policies.
While there is widespread acceptance of the need for broadband and its associated ICT developments, such as cloud computing, data centres, M2M, data analytics and so on, there is a significant lack of government policies aimed at utilising the social and economic benefits that can be derived from all this. The only government bodies who seem to be able to grapple with it are the national security agencies, who, especially in recent years, have dived into the ICT opportunities that have become available to them. The Commission would like to see a similar level of enthusiasm and commitment in the adoption of these new technologies by the ministers of healthcare, education, energy, environment, agriculture and so on.
Perhaps the single largest obstacle to digital development has been government finance departments. They are only interested in extracting the greatest possible amount of money from the telco industry through fees, licences and taxation – completely disregarding the national social and economic benefits that can be derived from it.
This needs to be changed, but for that to happen proper processes and systems need to be developed. So far this has been a key missing element in digital development. Perhaps certain institutions need to be developed, and this is something in which the Broadband Commission could play a facilitating role.
This will most likely constitute a large part of the work of the Commission in the future.
Sustainable Developments Goals
Closely linked to this task are issues related to the results of the Commission’s recent dealings with the UN member states, who are now, under the auspices of the UN, formulating the Sustainable Development Goals (SDGs), which, as of 1 January 2016, will follow up on the current Millennium Development Goals (MDGs). One of the reasons the Commission was established was to help in achieving the MDGs by using ICT tools. The Commission understood that this was well appreciated by those involved, so they were disappointed to see a lack of inclusion of ICT tools in the new SDGs. There is a fear that the mistakes made in the past will simply be repeated in the future.
The SDGs are formulated through a process in which the member countries participate. Lobbying for inclusion, therefore, will have to be done through the countries’ representatives. These are often bureaucrats from the departments of Foreign Affairs and Foreign Aid, who have little or no understanding of what ICTs can do for social and economic developments.
So in both situations – unleashing the benefits of broadband and ICTs on a national level, and using ICT tools to better address the SDGs – the leadership of the national governments will be needed, and this has proved to be a real problem. Aside from their departments of communications there are few champions within governments.
Over the last decade we have seen the development of hundreds, if not thousands, of pilots and programs. We do not need any more of these. What we need now is to see the ones we have being incorporated into government policy and upscaled. And sector reform and sector transformation is needed for this – breaking down the silos of resistance and developing more holistic (trans-sector) government policies. There is also an increased pressure from the bottom up – those involved in the pilots and programs – for governments to start moving on the mainly positive outcomes of the projects.
Telcos vs OTTs
Another key issue for the Commission will be to create a better dialogue between the telecoms industry and the internet or OTT companies. At the moment they are at loggerheads. Key elements here are the need to change what have been telecoms regulations into what should be broader ICT government policies aimed at protecting the underlying principles that govern:
- access to and on the open network;
- interoperability; and
- consumer protection.
The term ‘network compact’ was used to describe this new paradigm. The telecoms industry will need to move away from its regulatory micro-management. The old regulations are based on networks that embedded the services as well, while in the new situation the networks do not have embedded services. There is no longer a separate telecoms industry – it needs to be included in ICT. Current regulations and telco licences are still based on supporting the old model and this often results in situations where telcos are lobbying for a ‘fair regulatory advantage’. The World Bank has warned that this has become a real impediment to new investments in the sector, a topic it will address in its annual flagship report to be published in 2015 – focussing on the internet as a tool for development. Issues such as net neutrality, open networks and structural changes need be governed by ICT policies, not by telco regulations.
So, some significant new initiatives will need to be taken in the Broadband Commission 2.0 developments.
DRC telecom market - Africell's 3G launch to shake up mobile internet pricing 10 Oct 2014
Largely due to the country’s troubled history, the national telecom system in the DRC remains one of the least developed in the region. The national operator, SCPT, theoretically has monopoly rights under 1970 legislation. However, recognising the need for telecommunications infrastructure, the government is only loosely regulating the sector.
Mobile network operators have taken over as the providers of basic telecom services. By 2001, some 16 private operators had been granted mobile telephony licences and the subscriber base was growing at triple digit rates annually. However, the proliferation of networks also caused frequency spectrum shortages, interference and compatibility problems. As a result, the mobile sector has since consolidated and now has five major players.
Development of the DRC’s internet and broadband market has been held back by the poorly developed national and international infrastructure. However, the country was finally connected to low-cost, high-quality international bandwidth through the WACS submarine fibre optic cable in 2013, and SCPT is rolling out a fibre optic national backbone network with support from China. An alternative terrestrial international fibre connection exists via neighbouring countries. Broadband access is provided by 3G mobile services and wireless networks using WiMAX and EV-DO technology. The country’s first commercial LTE networks are imminent.
The internet market, dominated by mobile access, is set to receive a significant competitive boost when Africell launches its 3G network. The operator has already jolted the mobile market with its low pricing strategy, acquiring more than five million subscribers in the process despite ongoing difficulties in securing interconnection with other mobile networks.
- Connection to WACS international fibre optic cable finally completed;
- National fibre backbone rollout continues;
- Fifth mobile network thrives despite denial of interconnection;
- 3.5G mobile broadband services introduced;
- Airtel Congo and MTN Congo fined for mobile network quality and availability failures;
- Africell takes Vodacom, Tigo and Airtel to court over their refusal to interconnect networks;
- Yozma Timeturns pays initial licence fee instalment, proposes mobile services launch;
- Vodacom reaches dispute settlement with its partner CWN, paving the way for continued investment in the country;
- Airtel increases investment undertaking for DRC to $550 million, partners with BGFIBank Group to make its Airtel Money service available to bank customers.
- Regulator criticised by ITU for setting mobile pricing.
Companies covered in this report include:
Vodacom Congo, Bharti Airtel (Zain, Celtel), Millicom (Tigo), Congo Chine Telecom (CCT, Africell (Lintel), Société Congolais des Postes et des Télécommunications (SCPT, OCPT), Tatem Telecom, Gecamines, AfriTel (Starcel), Standard Telecom, Telecel International, Africanus.net, Interconnect (Vodanet), Microcom, Cielux Telecom, Global Broadband Solution (GBS), Afrinet, Congo Korea Telecom, Geolink, ICP Net, Orioncom, Paconet (Pan African Communication Network), RagaNet, Roffe Hi-Tech, Sattel, Société Internet Congolaise (SIC), Sogetel, Liquid Telecom, O3b Networks, Smile Telecom
This updated report provides a comprehensive overview of trends and developments in the DRC's telecommunications market. For detailed information, table of contents and pricing see: Democratic Republic of Congo – Telecoms, Mobile and Broadband – Market Insights and Statistics
Guinea - Sotelgui expected to re-launch telecom services after securing a $350 million loan 10 Oct 2014
Guinea in West Africa has vast mineral resources yet remains one of the poorest countries in the world. With five competing mobile networks, its telecommunications sector has shown triple-digit growth rates for three years in a row following the entry of two world-class international operators, MTN and Orange. The other competitors are Intercel, Cellcom and Lagui, the mobile unit of the national fixed-line operator, Sotelgui.
Following the exit of Telekom Malaysia in 2008, Sotelgui has being prepared for renewed privatisation, creating an attractive opportunity for a strategic investor. Despite the rapid growth in the mobile sector, penetration remains below the African average, while the country’s fixed-line and internet markets are virtually untapped.
Broadband services are still very limited and expensive. The landing of the first international fibre optic submarine cable in 2012, and the setting up of an IXP in mid-2013, will go far to help the nascent broadband market develop by reducing the cost of internet bandwidth and improving the reliability of infrastructure.
The country slipped into a mild recession in 2009, but stable GDP growth of around 5% per year is expected from 2014, possibly reaching up to 20% in 2015 and 2016.
Sotelgui expected to re-launch services having secured $350 million loan to build additional infrastructure; 400 cell towers put up for sale; first international fibre optic submarine cable lands; Mobile Money services launched; third 3G licence awarded in late 2013; government secures a $350 million loan to build a 4,000km fibre backbone network; strong growth in SMS traffic; MTN signs management contract with Huawei Technologies; Cellcom Guinea launches 3G+ services; Guineanet selects Altai to provide its WiFi hotspot platform.
Companies covered in this report:
Société des Télécommunications de Guinée (Sotelgui), MTN (Areeba, Investcom), Orange (France Telecom, Spacetel), Intercel (Télécel Guinea), Cellcom Guinee, MiriNet (Afribone), ETI, Universal Communication (DiscoveryTel), Ristel, Afripa Telecom, Alternet Systems, Broad Telecom, Soguicis, Thucatel, Telekom Malaysia.
This updated report provides a comprehensive overview of trends and developments in Guinea’s telecommunications market. For detailed information, table of contents and pricing see: Guinea - Telecoms, Mobile and Broadband - Market Insights and Statistics
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