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The Minister for Lost Opportunities 30 Jan 2015
I am very disappointed with the Minister for Communications.
Those who have followed my NBN analyses over the years will have seen, on one hand, my strong views on the need for good quality digital infrastructure – which I see as critical for Australia’s economic and social future – and, on the other, my respect for Malcolm Turnbull as a strong leader who regularly expresses a sound vision for the future of our country.
Because of this I have given him the benefit of the doubt in the hope that he would make the changes that would satisfy the political reality while at the same time working towards a sound outcome – one that would see Australia taking a lead position in building the infrastructure that will give the country the best opportunity to be a leader in the digital economy.
As I have reported before, most developed economies are now building fibre-to-the-premises (FttP) infrastructure and in particular other resource-rich countries have been – and still are – among the leaders in investing in FttP infrastructure, as a means of helping their countries to diversify their economies.
In my analyses of the NBN and the political changes in government I provide a range of suggestions for preserving the visionary elements of the original NBN plan, with options to satisfy the political reality that required change. On various occasions Malcolm Turnbull showed his clear understanding of the long-term need for fibre-to-the-premises; and his integrity, credibility and popularity also put him in a very strong position to build an NBN that would still be able to give Australia a broadband infrastructure at least equal to, or preferable better than, our trading partners, in order to give our country that competitive advantage.
Our suggestions included:
- Extending the build-out period, basically spreading the investment over more years.
- Maintaining ADSL2+ and HFC networks for a longer period of time.
- Opening up the greenfield market to competition, and
- Using VDSL for multi-dwelling units.
This could all be done without adjusting the end-goal of a national FttP network.
This would have done away with the need for the complex and far more risky and difficult to develop multi- technology mix (MTM). Instead, rather than the government forcing NBN Co to use the old copper network, it could have allowed them to continue with the FttP network in those areas where fibre upgrades made the most sense. As we see in countries such as Germany and Belgium, rolling out VDSL-based technologies over copper networks (which is similar to the major part of the Australian MTM) is easier said than done; and based on some early experiences in Europe, indications are that such a roll out will take longer, and cost more, than predicted by the vendors and incumbent telcos involved. The incumbents here don’t mind this as it simply prolongs the period where they can dominate the market. In Australia we see that the roll out the MTM is also strengthening Telstra’s position in the market.
You don’t roll out such networks every 5 or 10 years. This is a once-in-a-lifetime event. That being the case it should be done properly. What we are getting now will not last more than 5 to 10 years and then it will need another national overhaul. What a waste – particularly because we did have a perfect future-proof NBN plan in the first place, and the minister had a great opportunity to build on this and deliver it.
Rather than championing broadband infrastructure as President Obama is doing, our minister keeps talking down the need for a first-class 21st century broadband infrastructure. Initially I thought this related to political ideology, and for a long time I believed our minister stood above that. But looking at his actions I can only conclude that he, too, seems to be part of this partisan pettiness, and that he has not been able to look at the NBN from a national interest point of view.
Have you ever seen Mr Turnbull being passionate about the NBN and the economic and social opportunities it can deliver to our country? Compare that with the passionate speech of President Obama
, or the fervour displayed by the previous Minister for Communications, or the former EC Commissioner for telecommunications and the digital economy Neelie Kroes.
One of the reasons the previous government embarked on the NBN back in the mid-00s was that, because of Telstra’s monopoly and its lack of interest in building high-speed broadband infrastructure at an affordable price, we were at that time around the 25th
position on the international ladder signifying the quality of the provision of broadband. We accepted that embarking on the NBN wouldn't see an immediate improvement – since it would take time to build an FttP network – but that in say 5-10 years’ time Australia would end up in the top 10 on that ladder.
Now, ten years later, because of all the politicking around the NBN we have dropped from the mid-20s to the mid-40s on that international ladder. And because of all of the delays it will get worse before it gets even a bit better. I am saying ‘a bit better’ because most of our trading partners have not been sitting still, and by the time we begin to catch up they will have moved on to more and more FttP quality networks. The international bar has been significantly raised since Australia embarked on the NBN, yet we still seem to look at the bar as it was set a decade ago.
So, with the current MTM we will remain permanently at the bottom of the list, as we will be stuck with a national infrastructure monopoly without any mandate or funding or investment plans to move beyond MTM.
In the meantime the USA is moving ahead with FttP networks in their cities. Interestingly, in that country this infrastructure is now deemed to be critical for healthcare, education and other services. Google has been so successful with its FttP network that it has announced four more rollouts.
Reports from a range of countries involved in FttP networks indicate that there are no single applications that require fibre, but that it is the total capacity that is needed as a utility in order to ensure the usefulness of the applications and services to the end-users. Within households multiple users are simultaneously using broadband more and more, and also simultaneously using a range of devices. FttP allows for good user experiences at these peak-hours. It is not that each of these users or apps requires a gigabit of capacity, but the overall performance of all of the activities can be much better guaranteed if there is sufficient capacity available.
While the jury is still out on mass market demand of 4K TV, at the Pacific Telecoms Conference in Hawaii earlier this month NHK already demonstrated the next level up; Super 8K HD TV. It received great reviews but requires a 90Mb/s channel for delivery. As we speak IPTV is taking Australia by storm, whatever way we look at it there is no doubt that every single year more capacity will be required, as the importance of this market, and its size in the number of (video-based) services and applications, continues to grow.
There is no way that the MTM network, as it will be rolled out in full earnest from yet another delayed starting date of 2016, will be able to handle the capacity needed in 5 to 10 years. By that time Mr Turnbull – as the Minister for Communications – will be gone and forgotten, but his legacy as the Minister for Lost Opportunities will remain.
MNOs develop mobile wallet platforms in Senegal 29 Jan 2015
Senegal continues to benefit from solid economic development, with GDP estimated to have grown 4.5% in 2014. This has translated into consistent growth in the telecom market. The dominant player Sonatel, majority-owned by France Telecom and branded as Orange, has effective competition from a small number of operators, particularly in the mobile services sector where Tigo Senegal and Espresso have a 24% and 20% market share, respectively.
Competition in the fixed-line sector was introduced when Sudan’s Sudatel launched services as the second national operator (SNO) in 2009. Operating as Expresso, the company launched mobile services in the same year. The new entrant initially chose CDMA2000 technology to serve both market segments but switched to GSM technology in 2010, including 3G/HSPA mobile broadband.
The licensing of new operators has not always been transparent in Senegal, with the licences of both Sentel and Sudatel were awarded under controversial circumstances. Sentel settled a four-year licence dispute with the government in August 2012.
The mobile market has prospered, helped in part by poor fixed-line infrastructure in some rural areas. Mobile penetration reached about 111% by early 2015. A range of value-added services is available to subscribers, including mobile broadband access, which has become by far the dominant internet platform, accounting for about 93% of all internet accesses.
Development of the internet market until 2007 was hampered by Sonatel’s monopolistic pricing of bandwidth on the only high-capacity international submarine fibre optic cable serving the country. Despite this, broadband services in Senegal are relatively advanced, and a range of IP-based services including broadband TV (IPTV) and converged triple-play services are offered. Sonatel has progressively reduced its prices following the arrival of several competing international fibre optic submarine cables.
For detailed information, table of contents and pricing see: Senegal - Telecoms, Mobile and Broadband - Market Insights and Statistics
Cuba - Normalisation of relations with the US lifts restrictions in telecom equipment imports 28 Jan 2015
Cuba still has the lowest mobile phone and internet penetration rates in the region, and is also among the lowest for fixed-line teledensity. Fixed-line and mobile services remain a monopoly of the government-controlled Empresa de Telecomunicaciones de Cuba (Etecsa Cubacel).
There remains substantial state control over the right to own and use certain communications services, including the right to access the internet. Whilst the Obama administration has recently relaxed some of the embargo rules pertaining to telecom services, differences between US and Cuban pricing rules effectively preclude US operators from operating in Cuba. Although Raul Castro has made it clear that he will be reducing the size of Cuban state expenditure in favour of private participation in the economy, the genuine liberalisation of Cuba’s telecom sector is expected to be hampered slowly over the coming years. This has been keenly witnessed in the slow development of the submarine cable between Venezuela and Cuba, which in early 2013 was opened for traffic.
BuddeComm’s Cuba - Telecoms, Mobile, and Broadband report profiles the fixed-line, mobile and internet markets in the Caribbean’s largest country. It includes state statistical market data for 2011 as well as developments to February 2014.
For detailed information, table of contents and pricing see: Cuba - Telecoms Mobile and Broadband - Analyses and Statistics
Chinese government loans help fibre network rollouts in Mali 27 Jan 2015
Home to one of the world’s most isolated cities, the fabled Timbuktu, and with a generally challenging geography for the provision of telecommunication services, Mali has market penetration rates below African averages in all market sectors except mobile where it is now racing towards the 100% mark. The division of the country during 2012 with Islamists linked to Al-Qaeda controlling the north cast some uncertainty over future developments, but the recent intervention by French and African troops has resolved the situation at least in the short term. The economy contracted in 2012, but GDP growth has recovered and is expected to remain stable at between 5% and 6% from 2014 onwards.
Orange (France Telecom) was extremely successful when it entered the market as the second mobile and fixed-line operator in 2003. The company quickly amassed more than 80% market share, offering converged fixed, mobile and broadband Internet services.
The national telco, Sotelma with its mobile subsidiary Malitel was privatised in 2009 when a 51% stake was sold to Maroc Telecom. The fresh capital and management has enabled the incumbent to compete much more aggressively and regain market share.
A third mobile operator was licensed in 2012, but the local partner defaulted on its share of the licence fee, putting the joint venture in limbo. Building for the network was only begun in 2014. Despite the high mobile penetration in the country, enormous potential exists in the development of mobile broadband services. The introduction of basic mobile data services as well as ADSL and WiMAX has started to accelerate growth in the internet and broadband market, but Mali’s landlocked location makes it dependent on neighbouring countries for international fibre bandwidth, which has kept prices high. Improvements in this sector can be expected from the recent arrival of several new competitive international submarine fibre optic cables in the region.
For detailed information, table of contents and pricing see: Mali - Telecoms, Mobile and Broadband - Market Insights and Statistics
New IXP to improve internet connectivity in Honduras 26 Jan 2015
Among the poorest countries in Central America, Honduras has long been plagued by an unstable political framework which has rendered telecom reform difficult. Reform is critical if the country is to address some of the least impressive market statistics in the region.
The country has been on the cusp of bankruptcy for several years, and though a group of banks had written off $3.5 billion of debt in 2007 accumulated debt since then has reached $5 billion. The economic plight has contributed to crises within the government, with no consensus on how to formulate a budget for 2013.
These practical difficulties have had real effects on the country’s telecom market. Fixed-line teledensity at only 7% is significantly lower than the Latin American and Caribbean average. Poor fixed-line infrastructure has been exacerbated by low investment and difficulties in local terrain which have made investment in rural areas unattractive or uneconomical. As a consequence, the internet has been slow to develop in Honduras: DSL and cable modem technologies are available but relatively expensive, while higher speed services are largely restricted to the major urban centres. Nevertheless, the demand for broadband is steadily increasing and there are has been some investment in network upgrades to fibre-based infrastructure, though this is restricted to the main cities. Poor fixed-line connectivity has also inhibited the take-up of VoIP, which would otherwise be a preferred communications medium to expensive domestic calls.
On the positive side, these factors have encouraged consumer take-up of mobile services, a sector where there is lively competition supported by international investment and know-how. As a result, mobile penetration is about 20% above the regional average. Revenue from the mobile sector looks promising in coming years as operators invest in their networks, expanding their reach and upgrading their capabilities to accommodate mobile broadband services. Mobile data as a proportion of overall mobile revenue is likely to double in 2013, though low-end SMS services will continue to account for the bulk of data revenue for some years.
Political developments during the last few years have not facilitated the much-needed reform of legislation governing the telecoms sector. Partly this is due to political stalemate and ineffective legislators, but underlying the difficulties are the close ties between executives at the incumbent Hondutel and key members of the government. Charges of bribery and corruption are rife, and though the framework for reforming the Telecommunications Act remains before the Honduran Congress, there is little prospect of effective change in the short term which would bring about a properly competitive and fair market for some services.
For detailed information, table of contents and pricing see: Honduras - Telecoms Mobile and Broadband - Market Insights and Statistics
Strong economic growth fostering demand for telecom services in Ethiopia 23 Jan 2015
Ethiopia is one of the last countries in Africa allowing its national telco, Ethio Telecom (ETC) a monopoly on all telecom services including fixed, mobile, internet and data communications. This monopolistic control has stifled innovation and retarded expansion. A recently expired management contract with France Telecom dramatically improved performance for ETC though there remain weaknesses in quality of service. Although the contract was considered a first step towards privatisation and the introduction of competition, the government in 2013 again rejected calls to privatise the incumbent and allow market competition, citing the need for higher profits from the company to subsidise an unrelated railway project.
Although there is considerable investment in telecoms services, the sector is heavily regulated and the government has complete control over networks, with virtually unlimited access to the call records of all phone users and to logs of internet traffic. Most of the technologies deployed have been provided by ZTE and Huawei.
With a population of almost 90 million, Ethiopia is Africa’s second most populous country. Although a number of major contracts have been signed with Chinese vendors since into 2013, the country’s mobile penetration remains one of the lowest in the world. Nevertheless, growth is strong and enormous growth potential remains. Albeit from a low base, mobile penetration is rising and the sector continues to benefit from the poor fixed-line infrastructure which has promoted mobile alternatives as the only viable, or robust, telecoms option in many areas.
The country's broadband market is also set for a boom following massive improvements in international bandwidth, national fibre backbone infrastructure and 3G mobile broadband services. After years of low uptake due to prohibitive pricing, retail prices are now comparable to other markets in the region that are already more developed.
For detailed information, table of contents and pricing see: Ethiopia - Telecoms, Mobile Broadband - Market Insights, Statistics and Forecasts
Mobile technologies deployed to track Ebola cases in Liberia 23 Jan 2015
After more than a decade of civil war which destroyed much of its infrastructure, Liberia became a prime example of an almost entirely wireless telecommunications market. Four GSM mobile operators compete for customers – LoneStarGSM (majority owned by South Africa’s MTN), Comium (Novafone), Cellcom and LiberCell.
Internet services are available from a number of wireless ISPs as well as the mobile networks using GPRS, EDGE, HSPA and WiMAX technologies. The high cost and limited bandwidth of satellite connections means that most service offerings remain expensive and are below recognised broadband speeds. Nevertheless, substantial improvement can be expected from the recent landing of the first international fibre optic submarine cable in the country, though this still required considerable investment in domestic fixed-line infrastructure.
In the mobile sector, competition has led to some of the lowest call prices in Africa despite the lack of basic infrastructure in the country which has resulted in an expensive operating environment. The harmonisation of the disorderly licensing and spectrum allocation regime inherited from previous governments has proven difficult. However, market penetration has reached a par with other markets in the region in recent years.
An attempt to privatise the dysfunctional fixed network operator, the Liberia Telecommunications Corporation (now Libtelco) failed in 2005. Since then, efforts to resuscitate the previously neglected incumbent have continued. A wireless 3G system based on CDMA EV-DO technology enabled the company to enter the mobile market as a fifth player and to provide wireless broadband services. There are also plans for a national fibre backbone network. These assets would create an attractive opportunity to a strategic investor in a likely renewed privatisation in the near future.
The market is ineffectively monitored by the telecom regulator, which lacks the resources, technical expertise and documentation to enforce its orders. As a result, a number of operators are able to avoid paying dues to the government, and operate despite the regulator’s rulings that they must cease operating in the market.
For detailed information, table of contents and pricing see: Liberia - Telecoms, Mobile and Broadband - Market Insights and Statistics
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