Latest Analyses, blogs and news
Morocco - Vivendi’s sale of its 53% stake in Maroc Telecom raises €4.2 billion 12 Dec 2013
Morocco benefits from having one of the most advanced telecommunications markets in Africa. The sector is efficiently managed by an independent regulator, and developments within the market segments are often used as a model in other countries.
With an effectively competitive mobile sector, Morocco also has one of the highest penetration rates in the region. The three mobile network operators have become the main internet service providers through their networks, which are expected to be upgraded with LTE technology by the end of 2014 following the auction of suitable spectrum.
Vivendi’s sale of its 53% stake in MT in late 2013 to Etisalat is expected to introduce a new dynamic to a company which has been obliged to reduce the number of employees in recent years in a bid to cut operating costs.
The fixed-line market remains underdeveloped despite the launch of a second and third network operator to compete with Maroc Telecom. Fixed-line penetration has fallen since 2010 while the number of lines is expected to fall to about 2.9 million by the end of 2014. This reflects consumers’ preference for mobile services.
A similar trend is seen in the broadband market, where the dominance of Maroc telecom’s ADSL service has waned dramatically in recent years. Having once accounted for over 90% of the market, by the end of 2013 ADSL represented only 15% of internet subscribers, with 3G representing almost 85%. Nevertheless, fixed-line infrastructure is being upgraded as part of the government’s ten-year National Broadband Plan which aims to provide fixed or mobile broadband access to the entire population by 2022.
For detailed information, table of contents and pricing see:
Morocco - Telecoms, Mobile and Broadband
Anti-government demonstrations in Thailand and the impact of social media 11 Dec 2013
The rolling anti-government protests in Bangkok have again powerfully confirmed the importance of social media in sustaining mass rallies in this day and age. A combination of the structured messaging by protest organisers together with the far more random communications emanating from the massed crowds as they occupied the streets of the Thai capital has ensured the protests have a compelling momentum. The leaders of the demonstrations have for example been making extensive use of Twitter. At the same time, the protests have continued to be largely peaceful and the demonstrations have developed into a genuinely social event. There can be no doubt that the ability to use social media to tell one’s friends in real-time that you are protesting has been a major boost to the protesters and the effectiveness of the protests. The phenomenon of tens of thousands of people uploading photos of themselves and others to Facebook has become an integral part of the protests against the government of Yingluck Shinawatra. And of course those not present at the protests want to know what is happening and have been going on line to find out.
The protests were provoked by the government’s move to enact an amnesty bill that would allow fugitive billionaire former PM Thaksin Shinawatra to return to Thailand without having to face any legal consequences. Whilst the plan to grant an amnesty to Thaksin obviously triggered the mass demonstrations, prior to this there had been constant and widespread criticism of the influence of the former PM on the operations of government, especially through the PM Yingluck who happens to be Thaksin’s sister. It has been widely asserted that Thaksin was effectively running the country from exile.
The Thai-based, English-language newspaper, The Nation, underscored the incredible rise in social media usage since the protests began. It noted that Twitter was most commonly used to convey messages against the amnesty bill, and on Pantip.com, a popular Thai online forum, there were over 6,000 topics on politics, and nearly 200,000 comments directly related to the bill. In the meantime, Thai Facebook users have been changing their profile pictures to protest against the amnesty bill, displaying a black sign with the words ‘Against the amnesty bill.’ Social media outlets were being used not only to disseminate details on where to gather, but also on what strategies should be used. The social media element of the protests has also spread around the world,
It is not surprising that Thailand’s mobile networks have struggled to cope with the massive data load and that the huge volume of traffic had actually shut the system down temporarily.
By 10 December the protesters appeared to have achieved some sort of victory when the government announced that the parliament would be dissolved forthwith and that elections would be held. However, the protest leaders dismissed this gesture as not going far enough. The future direction of the protests remained uncertain. It is certain, however, that social media will continue to play a major role in the anti-government action.
There is considerable irony in the important role the telecom networks have played in the mass protests. It was Thaksin Shinawatra’s venture into the telecommunications industry and the mobile network in particular that saw Thaksin make his fortune. He sold his almost 50% stake in Thai mobile operator AIS to Singapore’s Temasek in 2006 for close to US$2 billion.
See: Thailand - Telecoms, Mobile, Broadband and Forecasts
Should the Pay TV model be retained – even though it is wrong? 11 Dec 2013
According to American research changing the Pay TV model from an autocratic model (you can get what you want as long as you buy prescribed bundles) to the one that is preferred by customers (they can select and choose what they want to buy) would mean that two-thirds of the current Pay TV channels will not be able to survive. According to the research by the banking firm, Needham & Co, the typical US family only watches between 16 and 20 channels, even though they have access to an average of 180. Percentage-wise the situation in Australia is roughly the same.
Within the current mass market model, if customers were to be given the choice the operators simply would not attract enough subscribers to most of their channels, and therefore they would not be able to sustain their current overall cost model. In all, within such a massive transformation it is estimated that some 1.4 million jobs and some $US45 billion ($A49.78 billion) in advertising revenue would be lost.
Even if one takes into account that the report was perhaps biased towards the plight of the incumbent industry, and that some of the predictions might therefore have been overstated, it is still a very bleak picture indeed for the traditional industry that is resisting change. This applies as much to Foxtel in Australia or Sky TV in New Zealand as it does to the operators in the USA. Its future is similar to what is being faced by many other sectors – to survive in a digital economy a significant portion of the costs must be removed. Of course, this can be ignored, but one only has to look at newspapers, book publishers, the music industry and the retail industry in general, as well as to companies like Kodak, Nokia, Microsoft and Blackberry, to see what happens if these trends are disregarded.
The writing is clearly on the wall. Millions of people are cutting the so-called Pay TV cord; they are moving away from the television set and using their tablets to bypass the traditional ways content is delivered, and they are using new services from the so-called over the top (OTT) providers who offer an ‘a la carte’ model using broadband-based delivery models.
So it might be true that in the American situation $US80 billion to $US113 billion of US consumer value would be destroyed if the industry changes its business model simply in a linear way – but who would do that?
The research seems to indicate that the model should not be changed as that would lead to the disasters listed. So should the current Pay TV model simply be continued because of the ‘poor’ industry find it difficult to transform itself? Can they continue to ‘tax’ viewers who do not watch most of the channels by still forcing them to subscribe to the packages that work in the interest only of the Pay TV operators?
It is fine to make statements like this to create a shock effect for politicians, in a bid for protection or for a media headline, but no responsible company would be foolish enough to move in that direction. However, if Pay TV operators don’t change the reality is that many others will jump into that space and start eating their lunch by building a whole new industry – one that could, over time, compensate for those financial and job losses in the old industry as new forms of entertainment are added to the old models.
People love their entertainment. It is the industry structure that is the problem, not the customers. And changes are already happening. Apple is now one of the largest entertainment companies in the world and YouTube (Google) is not far behind.
While the projected loss might be damaging for the incumbents, at the same time it will be a gain for consumers, who will get access to their preferred entertainment at significantly less cost. And competition and new technologies will favour the customer once they have the opportunity of choice. Fighting against the trend will, in the end, be futile. Biting the bullet now and starting an orderly transition based on new business models would be a better option for the incumbent industry than fighting rearguard battles and protecting the old model at all costs. That would eventually bring about their downfall.
It is interesting to see that Foxtel is moving in the digital direction, but their new models are still mainly aimed at protecting their current business and current revenues.
The average US entertainment channel costs around $US280 million to operate, including staff, programming and transmission costs. Based on those numbers each channel needs 165,000 viewers over the course of one year if it is to break even. While the market is significantly smaller the Australian situation will not be all that different. Interestingly, operating an OTT ‘digital channel’ could be done for as little as 10%-20% of that cost.
Obviously if the industry decides to change business models these high-cost structures will disappear, as they can utilise far more efficient and effective digital structures for every part of their business.
In Australia the old business model leads to Pay TV subscription prices of between $50 and $100+ a month. In comparison, the Australian Fetch TV model, based on IPTV, costs between $10 and $15.
The industry however, doesn’t talk about transformation. It is obvious that if, in a linear way, the old business model is retained and, in one way or another, the channels are reduced to the ones specifically requested by the customer, the per-channel cost to each household would rise sharply. Clearly that does not make sense, but is that a good enough reason to stick to the old model? Shouldn’t the solution be based on structural changes to the industry? We also know that for the lesser-used channels different models can be applied, based on niche subscription markets; and others simply need to be supported by the commercial organisations that are often already involved (cooking, fashion, shopping, etc).
Resisting true change means that the OTT providers are given a free rein to introduce new business models without too much competition from the incumbents. The incumbents are currently very powerful, but in time their positions will be significantly weakened by the new players using ever-increasing broadband capacities to make the delivery of these services better and cheaper.
Should NBN Co be prosecuted? 10 Dec 2013
It was good to hear Telstra CEO’s warm praise for NBN Co’s first CEO, Mike Quigley, at the commencement of Mike’s Charles Todd Medal acceptance lecture, organised by the country’s newest telco association TelSoc.
I agree with David Thodey that Mike has carried out a formidable task in establishing NBN Co from scratch and developing it to a company that is now seeing NBN uptake rates as high as 60%-80% in some connected areas. This demonstrates the enormous appetite Australians have for high-speed broadband services, something that is also confirmed in regular consumer polling.
I agree with Mike’s assessment – that any large-scale project such as this will have start-up problems; and that, given a well-managed plan and effective organisation, these will be ironed out over the duration of the project.
And by the time Mike left that was starting to show. He gave a few examples:
- Between March and September 2013 as many customers were connected to the NBN as had been connected in the entire period before March.
- By June 2013 500 MDUs were fully cabled for the NBN, and by September that had increased to over 2,000 buildings (at that time the rate was 200 new MDUs per week).
- NBN uptake rates increased from the 10%-15% in the early Tasmanian sites to 50% and even higher in later deployments (Canberra in particular saw phenomenally high uptakes).
It is a pity that in political circles it seems to be impossible to acknowledge and praise, as David Thodey did, the good work that has been done. Progress can only be achieved with projects like this if you build on top of each other’s achievements.
One of the problems that the new government is now facing is how to move from their exceptionally negative position on NBN Co to a more positive one. It is already becoming clear that its ‘cheaper and faster’ solution will be difficult to deliver. While 2016 now already seems to be impossible to reach, I believe that even a delivery of the’ cheaper and faster’ solution by 2017 would be quite a challenge. Hopefully this potential delay – all by the own making of the new government - will not result in even more extreme negativity simply to save political face.
What also was clear in Mike’s speech was that his task has been extremely challenging, with many policies being created on the run and then left to NBN Co to implement. This is a far from ideal environment to work in and, while the political circumstances under which it happened are well-known, it most certainly is not the best way to run a project like this.
It is also reasonable to assume that the government, while in opposition, did not have a complete understanding of what was happening and perhaps made assessments based on what might, in hindsight, not seem to be correct.
Mike’s presentation very clearly shows that there was no cost blowout – something that the current government estimated could run to $90 billion. If, after its reviews, the government still believes that the previous NBN Co data has been falsified or deliberately created to be misleading then I would challenge it to launch an official independent investigation into the past conduct of NBN Co under company law. If the government is genuine in its belief that NBN Co has run a failing business then it should launch independent investigation of this kind, where both parties can put their case before an independent judge.
But if we simply get more political rhetoric, insinuations and ideological comments I believe we should trust the previous board and management of NBN Co and discount the government’s biased version.
Another disingenuous attack has been on the delay of the roll out. While there certainly was and is a delay this occurred purely because of the longer than expected negotiations with Telstra and the asbestos problems in the Telstra exchanges. There is nothing wrong with identifying the delay but it should not be misused for political gain.
By all means make changes to the NBN if that will in fact make it possible to deliver a future-proof NBN faster and more cheaply, but without independent evidence to the contrary do not blame the previous team.
Despite all the negativism the new government can begin its NBN program with a formidable organisation and foundation in place. Mike listed these achievements:
- Building from scratch a company of close to 3,000 people, complete with all the necessary processes and systems.
- Launching a successful interim satellite service.
- Building a long-term satellite solution that is on schedule and on budget for services beginning in mid-2015.
- Rolling out a fixed wireless network.
- Building a transit network to support all access technologies – one that is on budget and on schedule for completion by 2015.
- The development of OSS/BSS systems that have been proved to function at scale, together with the establishment of a National Test Facility and a Network Operations Centre.
- The successful development and launch of a suite of products covered by the Wholesale Broadband Agreement. And, hopefully any day now, the finalisation of a 27-year special access undertaking (SAU).
- Building a greenfields fibre capability that can complete more than 30 new developments a week, anywhere in the country.
- Building a customer connect capability that connected more than 100k end-users and was rapidly growing the ability to deal with the exceptionally high take-up rates that were being experienced.
- A growing capability to build the local network and distribution network component of the brownfields network at a cost that preserves the integrity of NBN Co’s financial plan.
Again if this list is not correct the government should be very specific about it and otherwise a word of thanks to the previous team would not be misplaced.
Mike also praised the relationship between Telstra and NBN Co. Telstra started to cooperate with NBN Co even before final contracts were signed and that relationship has been further developed since then.
While this is obviously Mike’s side of the story, it is detailed and public and is open to scrutiny. Anyone who has evidence that all or part of it is incorrect, or that his account gives misleading information, should supply that evidence and I, for one, would be happy to publish it. We are talking here about a national interest project, not about a political football that can be kicked around at will.
We need to rise above politics if we genuinely want a future-proof digital infrastructure for our country.
Insights into the leading LTE markets around the world 10 Dec 2013
There is no doubt that LTE is going to take a prime position in broadband developments. With competitively priced services, innovative smartphones and an increasing range of very innovative apps, this market is set to continue to boom. Japan, South Korea, USA are just some of the leading markets in terms of LTE.
Across Japan, NTT has been running LTE trials in three areas, including rural, suburban and metropolitan environments, since 2008. According to NTT, one of the greatest features of LTE is extremely low latency, which means that wireless technology can be used for the traditionally fixed-line arena of video games. Low latencies, expected to be around 5ms, are critical for popular online multiplayer games. These games are rendered unplayable by the long lag times associated with existing wireless technologies and even slow fixed-line connections.
NTT wants to differentiate itself with LTE through video. DoCoMo President Ryuji Yamada announced he wants the company to be known as ‘Douga no DoCoMo’, which translates into ‘Movie DoCoMo’. DoCoMo recently introduced a service called BeeTV, which offers custom-made videos for mobile phones.
In South Korea; LTE went into commercial operation in 2011 when LGU+ and SK Telecom launched services.
Starting with the LTE launch in Seoul, SK Telecom planned to complete LTE roll-out in 23 cities including the Seoul Metropolitan area and six metropolitan cities by 2012, and secure national coverage (82 cities) by 2013 and have 10 million users by 2015.
One of the keys to LTE deployment is access to spectrum to keep pace with mobile data traffic which is expected to increase 10-fold by 2016. The Federal Communications Commission (FCC) in the US has also projected a 275MHz shortfall in required spectrum by 2014 if no further spectrum allocations are made.
Therefore one of the considerations for LTE expansion rests with infrastructure: to meet the demand for mobile data, operators will need to upgrade networks to increase capacity through adopting a range of solutions including RAN upgrades, additional spectrum, WiFi, small cells and distributed antennae systems (DAS).
For related information, see separate reports:
BuddeComm Intelligence Report - Global LTE Trends, Statistics and Leading Markets
Japan - Mobile Market - Overview, Statistics and Forecasts
South Korea - Mobile Market - Overview, Statistics and Forecasts
USA - Mobile Market Insights, Statistics and Forecasts
As Bangladesh’s mobile growth slows, regulator issues series of new licences, including 3G 10 Dec 2013
Bangladesh remains one of the poorest, most densely populated, least developed countries in the world; yet it has somehow managed to show considerable spirit in the development of its telecom sector. Bangladesh has discovered a way to grow the sector in spite of the odds. This nation of more than 150 million people, with its comparatively low GDP per capita, has been involved in the creation of a very competitive mobile telephone market. Most noticeable has been the willingness of Bangladesh to encourage foreign participation in these endeavours.
Following a number of boom years of expansion, the Bangladesh mobile market started showing signs of growth moderating in 2009. This easing has continued through 2012 and into 2013. There had been a truly stellar year in 2007 with the mobile subscriber base increasing by 70%. Growth eased to around 30% and eased further to less than 20% by 2012, with the country’s mobile subscriptions reaching almost 100 million by end-2012.
The strong growth in mobiles has been helped enormously by the deregulation of the country’s telecom sector. The rapid uptake of mobile services was no doubt at the expense of the struggling fixed-line sector, with low levels of teledensity and general shortcomings in fixed network infrastructure. The success of the mobile market, however, has been achieved in a country that continues to struggle with its lowly economic status, its frequent natural disasters such cyclones and floods and the slow implementation of much-needed economic reforms.
Despite a progressive regulatory regime, the country was slow to move forward with 3G mobile services. The first 3G licence in the country was awarded to Teletalk, the state-owned operator launching a pilot 3G offering in late 2012. The 3G licensing process for private operators was meant to follow quickly but became bogged down. The planned auction was finally held in September 2013. Four operators - GrameenPhone Banglalink, Robi Axiata and Bharti Airtel - acquired 3G spectrum in the auction, setting the scene for further developments in the market place.
The fixed-line segment of the local telecom market has had a very difficult time of late. For years teledensity has remained essentially stagnant at less than 1%, by far the lowest in South Asia. The country had been struggling with its underdeveloped telecommunications infrastructure and heavy bias towards the four main cities. Then, as the country struggled to put an effective telephone network in place, the fixed market experienced a major setback in 2010. The regulator shut down five of the country’s fixed-line operators because of their alleged illegal activities. As a consequence, within a two month period the number of fixed services in operation had fallen from 1.7 million to around one million. The market has since recovered to some extent but it was nevertheless a major setback for the telecom sector and there were ongoing repercussions.
The internet usage has been growing quickly in Bangladesh, although obviously this was happening from a very low base. With an estimated internet user-base of close to 10 million (a 7% user penetration) coming into 2013, the number of people using the internet had more than doubled in just three years. The local internet industry was obviously preparing to move into the next stage of its development. The country must work hard, however, to overcome obstacles associated with the country’s lowly economic status and still developing ICT infrastructure. Broadband internet is in its infancy, but the country has started moving on a number of fronts into wireless based services and has embraced mobile internet in a big way. This is important because the range of technologies on offer help overcome some of the infrastructure limitations and left the nation into a broadband regime.
For detailed information, table of contents and pricing see:
Bangladesh - Telecoms, Mobile, Broadband and Forecasts
Smarter tools, fewer jobs – how to address this conundrum? 10 Dec 2013
Strong political leadership is needed
The explosion in the use of smart technologies means that we can increase our productivity and, in general, that the work can be carried out by fewer people, especially in the well-developed economies. At the same time people in other parts of the world can now also participate in the more developed economies through the use of technology, and they can do so from a significantly lower cost base. The problem is that the productivity gains that are achieved from this are basically benefitting a relatively small group of people – the shareholders, the financials institutions and the management teams of the organisations that tap into these new developments and achieve increased productivity and efficiency.
And under our current economic models this is perfectly acceptable, and, from a traditional economic point of view, even commendable. However at the same time it is giving rise to a growing gap between that group and the rest of society.
We have seen similar highly disruptive developments in the past, going back to the Stone Age. Ever since that time it has been the new tools that we created – and our learning around it – that have shaped the future of the human race. And this will continue to be the way human endeavour operates, so in one way or another it will be new smart tools and education that will advance our society.
At the same time these tools can also assist us in addressing the challenges that we are presently facing – with a population marching towards 9 billion and significant pressure on our environment, natural resources, energy, climate and our lifestyle in general. But if we are to reap the benefits technology can offer us here we need to act globally rather than nationally. And this is where our political systems are failing us, as in the end every country will do what is in its own best interest.
This is because we, the people, are not willing to make the personal changes needed to deal with the global problems we are facing; or because we are fearful that such changes might have an effect on our current lifestyle or our own future. Politicians know that if they were to act in the best national/international interest they might suffer a backlash in the polls. We really need brave politicians who are willing to take a leadership position and accept the risk that they might not be re-elected.
How smart tools can help
Smart tools like the current ICT developments, based on utilities infrastructure such as broadband, smart grids, M2M, cloud computing and data centres, are going to be critical in this process, and they will affect every part of our society and our economy. These need to be developed in the most efficient and effective way so that everybody can use them to enhance their own lifestyle, both in private and in relation to work or business. Thus ICT infrastructure is crucial and it needs to be developed and managed in the national interest.
But fewer jobs
The problem with these smart developments is that fewer people are needed or engaged in these highly efficient processes, and this means that the income gaps are widening – this is very apparent in the USA, with 1% of the population earning 20% of the country’s income.
But in Europe, Canada, Australia and other developed economies also we see that the middle class is being hollowed out in this development. And this is especially the case with small business owners, many of whom will now actually earn something like $5 an hour, if the fact that they work close to 24/7 hours is taken into account. Before the economic crisis they might have earned $8-10 an hour.
Obviously this doesn't apply to all of the 100 million+ small businesses in the developed economies, but I wouldn't be surprised if it applies to at least half of them. The positive side of this is that they are adaptable and that they can often quickly bounce back in an economic upturn.
This process of increased productivity at the expense of human labour is set to continue. We can see it in basically all sectors of the economy: mining, manufacturing, agriculture, retail, banking and so on. Workers, office staff and middlemen are being cut out; back offices are becoming redundant; software-based services are replacing the advice and customer services previously provided by people; fully automated processes (M2M) in manufacturing, mining, agriculture, transport. All of this, and more, will continue along the paths that by now have already been well-established.
In other words this is not something that is going to happen. It is happening right now and will continue at an increased rate.
At the same time new economic activities that are being created generate fewer jobs, as many of them are based on the new digital economy models. So there is little hope that human labour will ever regain the value it has today.
Economic and social transformation
I can't see quick changes or easy solutions, so over time the only real solution lies in economic and social transformation. The processes creating the current economic changes are taking place much faster than the transformational processes that are being discussed by governments and industries – let alone being speedily implemented by them. Under our current political system and our current level of leadership they attract a significant amount of opposition from vested interests, certain ideologies and partisan politicians.
So at present the gap is only increasing. Is it going to take a breaking point (a great recession, economic collapse, war, uprising) before such issues are seriously addressed? Political ideology, grandstanding and rhetoric are easy. Real actions require a far more sophisticated, intelligent and cooperative (bipartisan) approach. Are our current politicians up to this challenge?
We have no choice but to reorganise the economy is such a way that there is no longer such a direct link between the performance of the economy and the wages earned by employees. Do I have a solution? No, but I can't see an easy shift back to the old economic models that are still being used, especially not with a human population of over 7 billion – of which many are well-educated and have internet connection, equipping them to join the world’s digital economies. For the next 25 years these new entrants will not only have an effect on the digital economy – they will also drive the value of human labour down further in the developed economies because of their ability to participate from low cost economies via the smart and low-cost tools that we are producing.
One way to counterbalance the growing income inequality is to move away from straightforward monetary rewards (wages and salaries) to lifestyle improvements – providing good quality and affordable national infrastructure in housing, food, water, healthcare, broadband, education, etc. Depending on the nature of the business, in some cases a better model is for employees to become equity stakeholders in the organisations (this is already fairly common in the new digital economy companies) rather than traditional wage earners.
The deep-seated problems that we are now facing can only be addressed structurally and at the moment at least, there does not seem to be the political will to implement the necessary changes. The ideas and strategies are there but in the developed world we see roughly an equal split between progressive people who want to see those structural changes and the conservatives who want to hold on to the current models, relying on past experience that has shown that things will automatically balance out eventually with little or no government intervention.
Over the last decade societies in developed economies have swung between these two political forces, often cancelling each other out in subsequent years; and this, of course, seriously hinders any structural changes needed for our future.
But the reality is that smart tools and cheap labour in a globalised economy necessitate structural changes to be made especially to the developed economies if an acceptable lifestyle is to be maintained.
BuddeComm Intelligence Report - Smart Grids and Energy Industry Transformation
BuddeComm Intelligence Report - Smart Infrastructure - Smart Cities the Way Forward
BuddeComm Intelligence Report - Telecoms and the GFC Insights
BuddeComm Intelligence Report - Will an Internet Failure be Disastrous to the Economy
Digital Economy - E-Government Transforming Services
Global - The rapidly changing governance environment of international telecoms
Global Broadband - Fibre is the Infrastructure Required for the Future
Global Telecoms - Industry Transformation with M2M, Cloud Computing, Big Data, Wi-Fi and New Spectrum
Global - BuddeComms International Broadband and Trans-sector Activities
More from Paul's desk from the BuddeBlog…
More News & Views from the BuddeBlog…