Guatemala prepares for multi-band spectrum auction by end-2016

May 2nd, 2016, by

Guatemala has emerged from a number of years of economic downturn, with GDP growth of about 4% during the last few years. The fixed-line market shrank for the first time in 2009, a trend which has been maintained since and partly attributed to customer adoption of mobile voice and data services as an alternative platform. Indeed, poor infrastructure has led to the country having one of the lowest fixed-line teledensities in the region. The broadband market has continued to grow but at a slower rate while the mobile telephony market has shown remarkably strong growth in recent years. As a result, broadband availability is limited. The outlook for the remainder of 2016 is characteristic of former years, with the fixed-line market likely to stagnate while the fixed broadband and mobile sectors develop steadily.

The anticipated growth in GDP per capita further into 2016 and 2017 will provide greater disposable household revenue and so stimulate demand for telecom and ICT services. This would be more marked should the country free itself from its legacy of violence, poverty, and corruption, factors which continue to inhibit prospective investors.

Among the poorer countries in Latin America, Guatemala’s telecom infrastructure has suffered from years of underinvestment from state and provincial governments. Network upgrades, in both the fixed-line and mobile sector, have largely been undertaken by the private sector. A number of key players, including Telefónica and América Móvil, are regional and global powerhouses which can tap into expertise and financial resources to bolster their Guatemalan businesses. Given the commercial impetus of these operators, insufficient government financial investment has resulted in many regional areas remaining with poor or non-existent services. Nevertheless, the country benefits from one of the most open regulatory frameworks, with all telecom sectors having been open to competition since 1996.

América Móvil controls about 75% of the fixed lines in service through its subsidiary Claro. Mobile telephony has been the most developed telecom market in Guatemala for several quarters and is likely to remain so for the next few years given the poor condition of fixed-line services. The intense competition amongst operators has helped to improve services and lower prices. Mobile penetration is on a par with the regional average, while the strong growth in the mobile subscriber base is a further indication that consumers are leaning to mobile telephony as an alternative to fixed-line services.

For detailed information, table of contents and pricing see: Guatemala – Telecoms, IP Networks and Digital Media – Statistics and Analyses

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Midsize cities are ready for the government’s multi billion dollar smart city fund

April 29th, 2016, by

Local councils and the Australian industry are working together in their approach to develop smart cities.

For the last couple of years Australian cities and businesses have been looking at the various smart city projects around the world. The country is rather late in the development of smart cities, but at the same time many earlier smart city projects around the world have not been particularly successful.

It is clear why this is the case. In order to become a smart city you need to have a smart council that can facilitate this development. Traditionally councils work in silo structures and hardly ever take a truly holistic approach to smart city projects. A real smart city project, however, demands cross-silo thinking – or, even better, the removal of silos. If the right foundation is not in place you end up with ‘death by pilot’. The world is littered with stranded, not-so-smart projects of that kind.

Smart councils need to be led from the top. The CEO or GM needs to create collaboration within the bureaucracy; open structures and open data systems; and a smart city manager, working across the organisation, needs to be appointed – while the mayor and the councillors need to show leadership to the citizens.

Next to smart councils a collaborative industry is essential – one that is willing and able to place the social and economic benefits of the community before commercial goals.

Together – local smart councils and the industry collaborative – then form a local council steering committee to look at smart city projects. Lessons learned from overseas tell us that one can only have successful smart city projects if they are based on sound business and investment models; and it is the industry that will have to come up with such models.

The reality is that before the social and economic benefits can be achieved, significant infrastructure investments need to made and the ICT infrastructure element of this is a critical horizontal layer that can link projects together. In this way costs can be shared between projects, and maximum social and economic benefits can be achieved.

This is where the new multi-billion smart city policy from the government fits in. Once smart councils and industry collaboratives have been established, sound business and investment models can be developed that are able to show the social and economic benefits. This will include new business and job developments in smart cities, as well as many lifestyle issues as discussed in the ‘30 minute smart city’ concept. A smarter city is a more prosperous city and in return the investments made by governments will not only deliver the social and economic returns – they will also deliver the tax returns requested by the government.

At the moment there are over 40 local councils (representing 8 million Australians) that have already developed smart councils, or who are in the process of becoming a smart council. And 20 leading Australian companies have committed to a collaborative smart city approach based on open systems and open data.

Interestingly, it is often easier for midsize cities to transform themselves than it is for metro cities, and several of these midsize cities are in an excellent position to bring projects forward that could benefit from the new government fund, because they already have a strategic approach and they will already have many elements in place that fit the conditions attached to the funding.

Paul Budde

Free report: Australia –  How to become a smart city

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The global streaming revolution is taking place

April 29th, 2016, by

The global digital media entertainment market continues to go from strength to strength in 2016. In particular the global streaming revolution is gathering pace. Streaming is closing in on broadcast TV and the Internet now rivals broadcast TV as a vehicle to deliver consumer content. The entertainment industry generally is flourishing on the back of improved mobile and broadband infrastructure and consumers today have an enormous appetite for gaming, social media, video streaming and music.

The success of social networking remains undiminished and the evolution of social media as a marketing and purchasing tool continues.  Accessing social media via mobile devices has become the norm in the developed markets and mobile social networking companies are now hoping to capitalise on the developing markets where mobile devices have the potential to be a much larger market than fixed based internet services. Mobile video communication in the developed markets is also a key area for potential growth via services such as FaceTime.

Facebook continues to dominate social media platforms.

Music was one of the key drivers behind the early developments in digital media and the music market was revolutionised when Apple’s iTunes Music Store was launched in 2003. With faster speeds, music streaming is now rising in popularity in both the fixed and mobile networks. The industry is finally seeing an acceptance of licensed music services and by the end of 2015 there were around 68 million subscribers to music services worldwide. In 2016 the digital music sector continues to have strong growth as it expands into new international markets and the number of licensed digital music services increases.

While the concept of Smart TVs presents a lot of possibilities – in reality many consumers feel that Smart TV has so far failed to deliver. Criticisms include that lack of user-friendly interfaces and frustration that applications are not updated as quickly as those on mobile devices. Despite this sentiment; some countries around the world are adopting smart TVs faster than others with uptake being driven by the streaming capabilities offered by Smart TV along with increasing demand for HD 4K.

Pay TV appears to have flat-lined, mostly in countries where cable has achieved 90% household penetration. There is increasing evidence of cord-cutting – consumers are turning off their TV and opting for over-the-top internet services. As a result, services such as the US video streaming service-provider Netflix are thriving. Netflix is currently expanding outside of its domestic market and in early 2016 it had over 75 million subscribers worldwide. In 2015 Hollywood’s revenues saw video streaming overtake revenue from DVDs for the first time.

Looking ahead, BuddeComm sees the continuing adoption of cloud technology in the digital entertainment sector along with the increasing implementation of wearable technology. Mobile gaming still has considerable growth opportunities, especially as mobile broadband infrastructure continues to improve. This will also assist the ongoing progress of mobile TV/video. The developing markets still offer enormous prospects for digital entertainment with changes to business models and content perhaps required in order to capitalise upon this potential.

For detailed information, table of contents and pricing see: Global Digital and Mobile Media – Video Streaming, Smart TV and Entertainment Industries

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Mobile broadband penetration in Armenia approaching 40%

April 28th, 2016, by

Coming into 2016 the Armenian telecom market represented another developing market that is very busy trying to put an effective national telecommunications service in place. With its relatively small population (3.2 million) and a GDP per capita of around US$3,500 in 2015, it does not offer a hugely lucrative market opportunity. However, the government and the operators have been systematically building telecom networks and offering services. By end-2015 the mobile penetration was about 120% and the mobile subscriber market was continuing to grow, with an annual growth rate of around 5%. On the back of the mobile networks an effective mobile broadband offering has quickly sprung up. By early 2016 the number of mobile broadband subscribers represented about one third of the total mobile subscriber base. In the meantime, the fixed-line market has been shrinking or at least levelling off at around a relatively high 18% penetration. At the same time, fixed broadband provided a solid base for internet access with 10% penetration; this was underpinning a reasonably high household broadband penetration by end-2015.

The local telecom market has had its difficult times. After a run of strong growth in mobile subscribers in particular, the market in Armenia experienced a major slowdown triggered by the Global Financial Crisis (GFC) back in 2009. Demand for telecom services in Armenia plummeted as the most damaging impact of the GFC hit the country in that year and mobile subscriber growth was negligible. Since then, there has been some strong overall recovery, although growth has been somewhat erratic.

The telecommunications sector in Armenia has certainly been experiencing a rollercoaster ride over the last two decades. The sector slipped into decline following the collapse of the former Soviet Union back in the 1990s, with the fixed-line teledensity falling markedly. This was partly as a consequence of the prevailing socio-economic instability within the region, but more significant a factor was that the country initially failed to embrace any vigorous reform in the telecom sector. Despite steadily improving economic conditions as the country underwent economic reform, the telecoms sector was initially slow to respond.

Eventually the telecom market started to be transformed. In the opening up of the mobile market, the government made a controversial decision in choosing a second mobile operator without transparent and competitive bidding; Karabakh Telecom (K-Telecom), a little-known Lebanese-owned company, was officially awarded a licence to operate a GSM network in Armenia. K-Telecom launched its VivaCell service in 2005. The Public Services Regulatory Commission (PSRC), the country’s telecom regulator, awarded a third mobile licence – to Orange Armenia. The newly licensed operator, 100% owned by France Telecom (Orange), launched a mobile service in 2009. Ucom, a fixed-line and internet service provider, was granted the country’s fourth mobile licence by the PSRC in 2013. The Orange Group then sold 100% of Orange Armenia to local service provider Ucom in 2015, the deal being duly approved by the PSRC.

The launch of 3G services by both ArmenTel and K-Telecom back in 2008 and then Orange Armenia in 2009 gave the mobile sector a major lift; new generation services have since formed the basis of a much healthier market with stronger ARPU being reported by the operators. By late 2011 a 4G service had been launched by VivaCell-MTS and it has continued to expand this service. ArmenTel/Beeline launched its 4G offering in 2014.

An important, and indeed very positive, regulatory development in the mobile market has been the launch of Mobile Number Portability in 2013/2014, with good cooperation by the operators a feature of its introduction.

For detailed information, table of contents and pricing see: Armenia – Telecoms, Mobile and Broadband – Statistics and Analyses

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Looking at fresh new options for the NBN

April 27th, 2016, by

A couple of weeks ago I mentioned that my American colleagues Tim and Lesley Nulty were visiting Australia, they are nearing the end of their 2 months stay and by now have a good high-level understanding of the situation in Australia. Their own speciality is the building of rural FttH networks. They will also speak at a Telsoc seminar in Sydney on May the 3rd.

Here is the comment they wrote for the Sydney Morning Herald titled: “Removing NBN’s artificial barriers could stop our system being ‘worst of both worlds”.

We are visiting scholars at the economics department of the University of New South Wales, and we are thoroughly enjoying our stay. Despite having academic qualifications, our professional lives have been spent in the “real world” of business, much of it in telecommunications, which today means broadband internet.

Our home is in the smallest and most rural state in the USA: Vermont. Our house gets four metres of snow, the thermometer regularly falls to -30 degrees celsius, the ground freezes two metres down every winter and the terrain is mountainous and heavily forested. Ergo, telecom infrastructure is difficult to build and maintain. Not surprisingly, much of the state has poor service — mostly obsolescent technologies like DSL and ADSL, plus band-aid systems like satellite or fixed mobile.

In Sydney we are staying in a flat in Randwick — a prosperous, densely populated residential district with magnificent weather: ideal for telecom infrastructure. It ought to be a telecom gem, served by the latest fibre-to-the-premise (FTTP) networks. In fact we have the same poor service at our Sydney flat that we have in frozen rural Vermont. This is astonishing to us. If juicy suburban plums like Randwick have poor service what, is happening in the rural outback?

Akamai, a global internet company, recently rated connectivity in Australia as 60th in the world. Presumably rural areas are at the bottom of even that sad scale.

Our profession is building universal FTTP networks in difficult rural areas, and we are successful in doing so. Although rural telecom service in the USA is frequently poor, it is improving because rural people around the country are taking matters into their own hands and launching local projects to build the infrastructure they need. Despite bitter rear-guard opposition from the large telecom incumbents, many hundreds of local projects run by all sorts of parties (individuals, co-ops, local towns, private companies, small telephone companies) are underway all over rural USA (which, incidentally, is just as vast and sparsely populated as Australia).

In fact, when we look at rural Australia we see conditions that are far better than most of the USA. But, we see very few similar local initiatives. Why?

When we ask people, even experts shrug their shoulders and point to the NBN controversy. The original vision of the NBN, “FTTP everywhere”, was laudable. Private monopolies are notoriously bad at deploying new technologies and have been in the USA and most other countries. That seems to have been the case in Australia as well. In frustration, the government launched the NBN to fix the problem.

But government monopoly programs are rarely any better than private ones — especially in dynamic sectors like telecom. True to form, it seems that execution of the original NBN did not measure up to the admirable vision. But the new government appears to have kept the flawed execution mechanism (government monopoly) while discarding the admirable all-fibre goal. Seems like the worst of both worlds to us.

It doesn’t have to be that way. There is no need for monopolies of any kind to build state-of-the-art FTTP infrastructure. In fact, contrary to common mythology, economies of scale are small in this sector and need not be a barrier to FTTP development. Profitable companies as small as 1000 customers are being built entirely with private capital in circumstances more difficult than you have in Oz.

Nor are these networks rocket science. As we look around, we see plenty of people in Australia with the energy and talent to build them. If you are smart and enterprising enough to build and run a farm or small business in rural Australia you are smart enough to build and run a local FTTP network as well.

Government should encourage new entrants to do exactly that by eliminating artificial barriers to entry, maintaining a level playing field, making sure that there is some entrant addressing every part of the country, and then get out of the way.

Today and for the foreseeable future the internet is the chief engine of the global economy. Those that don’t learn to ride it will sit by the wayside and watch prosperity go elsewhere. Consider a recent note on the web from IBM:

The world’s largest taxi company owns no vehicles (Uber)

The world’s largest accommodation provider owns no real estate (Airbnb)

The world’s largest telephone companies own no telecom infrastructure (Skype, WeChat)

The world’s most valuable retailer has no inventory (Alibaba)

The most popular media owner creates no content (Facebook)

The world’s fastest growing bank has no cash and no branches (SocietyOne)

The world’s largest movie house has no cinemas (Netflix)

But: they all live and die by the internet … and the broadband that carries it.

And so do millions of small and medium businesses — especially rural ones —for whom the internet is their umbilical cord to markets for their products and services.

Tim and Lesley Nulty

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