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Smart Cities and Artificial Intelligence – The Global Transformation has Begun 02 Sep 2014

Transforming our cities into the Smart Cities of the future will encompass incorporating technologies and key digital developments all linked by machine-to-machine (M2M) solutions and real-time data analytics which sit under the umbrella term of the Internet of Things. Smart cities however must be underpinned by the appropriate ICT infrastructure based on fibre optic and high-speed wireless technologies, which is well underway in many developed cities around the world.

This infrastructure allows for the development of smart communities; supporting connected homes; intelligent transport systems; e-health; e-government and e-education; smart grids and smart energy solutions – just to name a few of the exciting solutions smart cities will incorporate. Many of the technological advancements emerging around the world today can, and will be, applied to smart cities. Artificial Intelligence; Electric Vehicles; Autonomous Vehicles; Mobile applications; Drones; Wearable and Smart devices and so on are just some of the key developments to watch.

Artificial Intelligence developments are accelerating and as more companies enter this sector and start investments to develop it - we will see further astonishing innovations emerging over the next few years. AI applications are already being used in healthcare and gaming, just to name two sectors adopting this cutting edge technology.

Smart Transport, also known as Intelligent Transport Systems (ITS) increase the safety and efficiency of transport networks – from public bus, tram and train transport, to rail and road freight transport, and private and commercial road transport. ITS systems include the software and hardware for electronic vehicle-to-vehicle and vehicle-to-infrastructure communication and information systems. In 2014 there are already hundreds of thousands Electric Vehicles (EV) on the road around the world and by 2015 there may be more than 2.5 million Plug-in Electric Vehicles (PEVs) in operation. It is thought that the business sector may become a key driver to the uptake of PEVs once the market is further developed and becomes a viable solution for enterprise fleets.

Unmanned aircraft (drones) are also certainly going to play to larger part in global developments and have many potential applications for the smart communities of the future. While most countries currently restrict the use of drone devices – it is thought that this will change quickly once the applications for such technology fully emerge and can be properly regulated. Agriculture applications in particular offer huge opportunities for drone usage along with telecommunications; defence; traffic management; surveillance; mapping; emergency services; weather monitoring; resources exploration and environmental analysis.

The development of smart cities and indeed smart countries requires vision and recognition of the fact that many of today’s social, economic and sustainability problems can only be solved with the assistance of ICT. In many situations the uniqueness, affordability, capacity, robustness, security and quality necessary for this calls for fibre optic and high-speed wireless infrastructures. This need will increase dramatically over the next 5 to 10 years as industries and whole sectors (healthcare, energy, transport, water) carry out the process of transforming themselves in order to much better address the challenges ahead.

BuddeComm’s new report, Global Smart Infrastructure – Smart Cities and Artificial Intelligence the Way Forward, provides important insights into why smart communities and smart cities are required for a future as populations increase and place further pressure on the world’s resources and infrastructure. This unique report also includes information on smart transport; smart buildings and connected homes; wearable devices and sensors; M2M, Big Data and artificial intelligence developments – supported by case studies and examples where applicable. Please note: for Smart Grid information, see separate annual publication.

For detailed information, table of contents and pricing see: Global Smart Infrastructure – Smart Cities and Artificial Intelligence the Way Forward

Thailand’s military coup creates further challenges for the telecom sector 02 Sep 2014

The one single feature that characterises the Thai telecom industry has arguably been the stop-start approach to sector reform and re-regulation. An important step was taken with the Telecommunications Act being adopted as law back in 2000, but over the last decade or so successive governments have moved slowly on its implementation.

Then, following a period of serious political instability, in May 2014 there was a military coup that threw the administration of the country into a new phase. The junta that took power signalled a clear intention to take control of the country for a significant ‘transition’ period. During this time they intended to continue the full administration of the country and inevitably this meant certain things would change. This of course was to impact in a major way on the telecom sector.

By 2014 a range of deregulation issues were still crying out to be addressed. But the military coup made for an uncertain future. One of the big structural reform issues – the defining of the roles and the restructuring of TOT and CAT – was demanding urgent attention. In fairness to the industry regulator at the time, the industry over the years has not seen a sustained period of consistent policy direction from government. The market had been waiting a long time for the creation of the promised new regulator as well as for the allocation of 3G spectrum.

Thailand finally got its new regulator, the National Broadcasting and Telecommunications Commission (NBTC), in 2011. With the appointment of the board members, the new commission was able to start operating in its defined role. Things have now started to happen. The commission’s first half year of operation certainly saw a lot of positive action. And most importantly the 3G licence auction took place as scheduled in October 2012. Even more critically was that it took place against considerable opposition. The regulator continued to be resolute meaning that real change was taking place.

Thailand’s mobile market saw growth slow as the national economy turned down in 2009 and by 2012 the annual growth rate in the mobile market was around 6%. With some easing in the expansion anticipated anyway as the market passed the 100% penetration milestone, the demand for service has been negatively affected by the state of the economy. Nevertheless, on a positive note, mobile subscriptions having more than doubled over the past six years and penetration had reached almost 140% by early 2014. The market’s long run of robust expansion, a run that had started in 2000, was probably coming to a close. As growth in the mobile market began to slow, the operators were hoping that their newly launched 3G networks would help stimulate fresh business growth for them. A once all-powerful duopoly - AIS and DTAC – was still dominating the market despite the challenge of the other players. In reality, number three in the mobile market, True Move, was the only one to challenge the big two in any fashion.

The Thai internet market has been continuing on a growth path over the last number of years. The demand for internet and internet-related services finally began to increase, as evidenced by the expanding volume of international bandwidth. Recognising that the surge in services has been occurring from a relatively low base, Thailand still has a lot of development work to do to catch up to some of the other countries in the region. The country’s estimated PC penetration rate, for example, was still less than 25% at end-2013 and, although moving rapidly, the development of high-speed access had really only just started. Operators were looking at a variety of delivery methods to augment internet penetration. The burgeoning mobile market in Thailand ensured that mobile phones, as well as set-top boxes, were high on the list of potential delivery devices. At the same time, the cybercafe in its different forms had already established itself as a key element in the country’s access equation. Most importantly, with 3G and even 4G services being rolled out in a significant way, mobile broadband was booming and the smartphone and tablet market has been running hot.

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

Where should the telcos jump next? 01 Sep 2014

With declining revenues now across all of the major revenue segments – something in the order of $25 billion worldwide – it is 2 minutes to 12 and the industry needs to act. Unlike previous situations, this time there is no large money-spinner around the corner for the telcos, such as we saw in previous situations when broadband and mobile came to the rescue.

So, what is next and what to do with all the cash that these telcos are still generating? The fear is that they will not use these revenues strategically and that, as has so often been the case in the past, they will waste a great deal of money on ill-fated adventures – mainly because of structural misfits between the vertically-integrated nature of the incumbent and the highly sophisticated strategies needed, especially for investments in the digital economy.

There are three growth scenarios for the incumbent telcos that we will discuss:

  • International consolidation
  • Structural separation
  • Digital economy and OTT opportunities

International consolidation

National consolidation between telcos and ISPs is one of the areas that is currently seeing the most activity, but once that avenue reaches its commercial and regulatory end other options need to be explored.

One obvious development after this will be to continue this, but on an international level. If growth is no longer occurring companies will need to address cost, as their digital media competitors are able to deliver most of the traditional telcos’ services for 80% less, and some are simply offered free.

When we looked at previous international telco consolidation attempts in the fixed telco market – in particular the ones in the late 1990s and early 2000s – we couldn’t find many success stories. At that time hundreds of billions were lost by US telcos, which, tellingly, were at that time more numerous than currently is the case – the US market has since contracted to only three major telcos, each operating mainly within geographically exclusive areas.

Since that time more successful consolidation has taken place – especially between mobile operators – but the models that are used by these operators are also still based on a vertically-integrated industry structure. While the vertically-integrated nature of the mobile market still has a few years to go, here also we will see the limits of consolidation between vertically-integrated companies.

Back to the fixed operators ….. they tried to acquire and than merge with other international vertically-integrated telcos but failed miserably. So lessons need to be learned from those attempts, basically looking at mergers and acquisitions more along structural lines. Telco activities can be split into three categories:

  • Infrastructure
  • ICT
  • Services

Each of these segments have very distinct investment and business model structures and simply merging vertically-integrated structures is probably not the way to address consolidation at this point in time. They will need to look more at the various individual elements of their organisations before deciding where they want to go.

Structural separation

Telcos are really effective in operating in markets where they are the dominant force; however technology and regulations are diminishing the opportunities in these markets. The only market that will remain dominant is national infrastructure, but without the other two elements (ICT and services) attached to it, this will rapidly become a utility industry, similar to electricity, gas and water. For those focussing on this market there will still be significant money to be made, and this could possibly be the end result for most of the national telcos.

Once structural changes have been made it will also become easier to embark further on international consolidation. The (national) telcos leading these structural changes might well become the major consolidators in the international market, mopping up failing and stranded telcos and their infrastructure assets.

Digital media and OTT

And then there are the opportunities in newly emerging digital economy markets.

So far investment made by the telcos in areas such as ICT, e-health, smart grids, smart cities and so on has been piecemeal, and often those investments have been smothered by the internal bureaucracy of the organisations, the new acquisition ending up either integrated in the old existing silos within the company or tucked away in an insignificant corner of the organisation.

As mentioned, the telcos are still among the most cash-rich organisations in the world, and they could, if they wanted to, easily make far more substantial investments in the new areas of the digital economy that are emerging. Of course this is risky, and risk is something the telcos are not accustomed to. And it has to be said that in the past investments of this kind made by the telcos largely failed, again mainly because of the mismatch between vertically-integrated models and highly specialised new services.

Those who dare to embark on these markets need to look at lessons that can be learned from the digital media companies. They went for the low-hanging fruit across areas in the market, looking for industries that were ready for disruption – and this included the telcos, but also the music and broader entertainment industry, retail, publishing and so on. The ones that are now heavily under attack are utilities, healthcare, education and government agencies and these are the sectors that will next have to bear the brunt of digital disruption.

However the telcos are not alone in pursuing these markets. Each one of these sectors is attracting a range of companies that want to participate in the disruption and it is unlikely that telcos can dominate a particular sector. So they will need to be involved in many of them and establish horizontal lines of product and services that they can share on their infrastructure across these sectors, so as to create attractive points of differentiation and cost savings.

Collaboration and partnering would also be key elements in areas where the telcos can no longer be the dominant players. But cooperation is not really the strongest element of their culture and it will be interesting to see which of the telcos are going to make it in these sectors.

Despite all of the difficulties and failures of the past there are no longer many other options open to the telcos. In one way or another they do need to open up more revenue streams and it is up to them to select the model that best suits their market and their organisation.

Paul Budde

See also:

BuddeComm Intelligence Report – Need for New Finance and Investment Models for Broadband

BuddeComm Intelligence Report – OTT and Industry Transformation

BuddeComm Intelligence Report – The Many Aspects of Broadband Infrastructure

BuddeComm Intelligence Report – The Top Global Trends for Telecoms

Global – The Rapidly Changing Governance Environment of International Telecoms

Global Broadband – Demand for Fibre Networks Grows

Global Mobile Communications – The Key Statistics, Trends and Regional Insights

Global Telecoms – The Big Picture – Key Industry Statistics

M2M hype and reality 01 Sep 2014

There are many predictions that the next big wave in telecoms is M2M and that this will be the next growth market for the telecoms industry. There is no doubt that M2M is a revolutionary development, but we need to separate the hype from the reality. In order to do this it is best to divide the major developments into two main areas, although there is no doubt that others will emerge over time.

One area is the sensors that are being installed in networks such as electricity, the environment, roads and other infrastructure. The other area can perhaps best be described as one of embedded technology linked to mobile phones, wearable devices, and many other consumer devices such as home automation, security and hobby-based applications.

The first category is potentially an area in which the telcos can be directly involved, working with large organisations such as utilities, government agencies, etc. They will use their mobile networks to link together all those separately installed sensors while data storage and analysis can be either provided on a service basis by the telcos or undertaken directly by the customer.

The other development is more consumer-oriented and is currently dominated by the digital media companies. They will largely bypass any direct involvement with the mobile networks and will link directly, through the mobile data or WiFi networks, to the various apps that are developed for such applications.

The actual data requirements of the application is provided through the existing fixed and mobile broadband packages as they have been purchased by the customers from the telcos – there is no separation of what data is used for what a data application. So in reality there is not a lot that telcos can do to influence that market and obtain a share of it. And the data use of IoT is rather low, so it will not immediately lead to an upgrade of the broadband subscriptions either.

With IP-based technologies it is also rather easy for other parties to build both M2M and IoT infrastructures, so it will be a rather diverse market that will make up the overall M2M market. We already see some of these developments happening in the corporate world at mining sites, campus-based infrastructure, hospitals, etc.

Smart cars, building and city-based developments potentially fit into an overlap area between the two. The mobile carriers will also be forced increasingly into MVNO or other wholesale-based arrangements, especially if the telcos don’t want to see this market being totally dominated by the OTT providers.

On the M2M side, which is more of a wholesale nature, the telcos are in a prime position to dominate this market; however the price needs to be very competitive or else those organisations will develop their own M2M infrastructure.

So yes, in the broadest sense M2M will be – and to certain extent already is – a major game-changer, but there are distinct segments within it, and the borders between these segments have already been drawn and it is clear who the major players are/will be in each of these segments.

And while the telcos can potentially play a key role in this market the most innovative and exciting new M2M/IoT developments are currently being developed by the OTT companies.

Paul Budde

See also:

BuddeComm Intelligence Report - M2M, IoT and Big Data - Key Global Trends

BuddeComm Intelligence Report - The Cloud Computing Revolution

BuddeComm Intelligence Report - Data Centres - A Key Global Development

Australia - M2M and The Internet of Things

Airtel launches an m-health insurance service in Burkina Faso, following success in Ghana 30 Aug 2014

Despite fresh investment in Burkina Faso’s telecom sector, new technologies have been slow to take hold. Delays in the development of a 3G service have hobbled the potential of broadband services. Nevertheless, the poor state of fixed-line networks have meant that in recent years the number of fixed-line subscribers has fallen steadily as customers migrate to the limited services available from the three mobile network operators. The fixed-line incumbent Onatel, majority-owned by Maroc Telecom, operates the country’s fixed-line network, a CDMA2000 wireless network, a fibre optic backbone and one of three GSM mobile networks, Telmob.

Mobile telephony has experienced strong growth since competition was introduced in 2000 by Celtel/Zain (now Bharti Airtel) and Telecel International (now Moov). Although market penetration remains below the African average, is continues to grow steadily, including a 30% growth in the number of subscribers in 2012 alone.

Onatel’s FasoNet is the country’s leading internet service provider, dominating the broadband market with its ADSL and EV-DO offerings. Penetration rates in this sector are still extremely low and services remain expensive despite some price cuts since 2011. Being landlocked, Burkina Faso for long depended on expensive satellite links for its international bandwidth, though in recent years connectivity has been facilitated by transit fibre links through neighbouring countries which have access to the region’s international fibre optic submarine cables: the four submarine cables which land in Ghana have reduced the cost of international bandwidth. A number of Burkina Faso’s other neighbouring countries also have access to multiple international cables. However, consumers and the country’s entire economy will only benefit from lower broadband prices if Onatel passes these cost savings on to them and also to other ISPs on the wholesale level.

The mobile operators have entered the underdeveloped internet sector by offering mobile data services using GPRS and EDGE technology, but third generation (3G) mobile broadband technology has not yet been introduced except for Onatel’s EV-DO fixed-wireless service. An international tender for a new combined fixed and mobile licence was unsuccessful in 2010, but a much-delayed fourth mobile licence and 3G licences for all operators are expected in 2014, with Viettel emerging as a bidder early in the year.

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

Videotex had a bitcoin-like facility 29 Aug 2014

Back in the 1970s a precursor of the internet was launched, known as videotex. It looked very much like the broadcasted teletext service, but it operated as an interactive online service. BuddeComm was involved, first in Europe and later in Australia, in ‘websites’ for companies who wanted to run services over these videotex networks. We set up the Telebank service for the Commonwealth Bank (the first national online banking service in the world), and we set up sites for some 25 airlines. In all, we either set up or ran more than one hundred such services.

When the internet started to emerge from the academic and defence environments and move into the commercial markets, with developments such as www and web browsers, we of course moved along with it; but we were very critical regarding one missing element. Videotex had a charging facility that allowed service and application providers to instantly charge for their information and their services – without the need for credit cards, paypal, etc. There was a so-called price per page that services providers could put on their information ‘pages’ and that was charged via the billing systems of the network operators (in most cases telecom operators). This allowed for charges as low as 1ct per videotex page and a maximum of 99ct per page. The size of these ‘pages’ was limited to a grid of 40x24 characters.

While not ‘digital’ in the exact sense of the word this was in fact a form of payment that is now emerging in the world of digital payment. Also unlike bitcoin these payments systems were based on the national videotex systems, it was not an international system.

Bitcoin is in essence the latest form of an international digital payment. This could bring back to the online market what videotex in a rudimentary way was delivering to the service and application providers all those years ago – an easy and secure micro-payment facility that bypassed credit cards and PayPal systems.

Obviously, as we already see, it will be those same financial institutions who are going to offer these new forms of electronic payment next to their credit card and other payment facilities. But at the same time, as was the case (albeit in a very limited form) with videotex, it will also allow for new players in this tightly controlled financial services market and they will be a welcome addition to the competition.

Ironically it was mainly the telcos who operated those early forms of electronic payment over those videotex systems, via their telephone bills, and these same companies would give anything to be in control of such a crucial and lucrative e-payment business model today.

Paul Budde

Global Digital Economy - E-Commerce and M-Commerce Key Trends and Statistics

Cote d Ivoire - VipNet prepares for commercial LTE launch, offering competition to Orange 28 Aug 2014

During the last few years Cote d’Ivoire has benefited from strong economic growth, with GDP having grown by 9.8% in 2012 before slowing to 8% in 2013 and an expected 8.2% for 2014.

Although it has two competing fixed network operators, the country's telecommunications sector is dominated by mobile telephony, with South Africa’s MTN and France’s Orange leading the market. The launch of three additional ore GSM networks between 2006 and 2008 – Moov (owned by Etisalat of the UAE until it was sold to Maroc Telecom in May 2014), KoZ (operated by the Lebanese Comium Group) and Oricel Green Network (backed by Libya's LAP Green) – has accelerated market growth and pushed mobile penetration well above the African average. Two additional operators have been licensed and are preparing to enter the market, but problems with frequency spectrum allocation have caused continuing delays. Some consolidation can be expected in this crowded market in the future.

The internet and broadband sectors have remained underdeveloped. This is partly the legacy result of high international bandwidth costs caused by the incumbent having monopoly access to the only international fibre optic submarine cable serving the country. This was addressed in recent years, with the landing of a second cable in November 2011 and with up to three more cables expected to land in the near future. Significant reductions in retail pricing for some of the existing ADSL, WiMAX and EV-DO wireless broadband services can already be observed.

The biggest game changer, however, has been the introduction of 3G mobile services. Following years of delays, the first 3G licence was finally awarded in March 2012 and the first 3.5G mobile broadband service has been launched, offering up to 42Mb/s using HSPA+ technology. The extensive geographical reach of the mobile networks will now make the internet accessible to a much wider part of the population. With a national backbone network including more than 20,000km of fibre optic cable, Cote d'Ivoire is in a good position to translate these improvements in competition and infrastructure into a booming broadband market and digital economy.

Further changes are expected by the end of 2014 following the commercial launch of LTE services from Orange and VipNet, which will see a significant increase in mobile broadband availability.

For detailed information, table of contents and pricing see: Cote d Ivoire (Ivory Coast) - Telecoms, Mobile and Broadband - Market Insights, Statistics and Forecasts

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