Fibre access technologies finally capture dominant market share

June 27th, 2016, by

Recently there was an important development for the broadband sector with the market share of fibre infrastructure lines finally overtaking DSL technologies as the largest on a global level.

The fixed broadband network is the infrastructure needed to meet the needs, both economic and societal, of the developed markets. In fact in many of these markets, wireless broadband and FttP are developing in a complementary and harmonious way. For the foreseeable future a significant part of regional and rural areas will have to rely on wireless broadband.

Many global leading organisations have now publicly acknowledged the enormous importance of well developed broadband infrastructure for a sustainable future in terms of the economy, society and environment. Despite this recognition, there are still citizens of the undeveloped world who do not have regular access to the Internet.

It is the countries where civil stability has taken a stronghold that we will see the most progress towards building sufficient ICT infrastructure – and it will be these same countries where we will see poverty decrease further. However countries without a stable society will not see any of that progress among the majority of their people. They lack the conditions and institutions that would allow for ICT and other developments to occur and create long-lasting change.

In the developing markets, mobile broadband will be the only way to advance telecoms developments in markets which have little or no fixed infrastructure in place. These networks will not only be used for telecoms – but even more importantly, for economic and social applications such e-commerce, m-payments, e-health, e-education and e-government.

This growing penetration of fibre infrastructure will eventually lead to huge advancements in important sectors such as e-health.  In countries with a clear policy for an advanced broadband infrastructure, such as a National Broadband Network, BuddeComm sees e-health emerging to allow us to enjoy advancements in medical technology at more affordable costs. On truly high-speed broadband networks, e-health is rapidly shaping up as one of the key killer apps.

For detailed information, table of contents and pricing see: Global Fixed Broadband Market – Trends, Statistics and Progress

We invite your comments: Please click here to comment

Tagged in: , , , , , , , , , , , ,

Telikom Papua New Guinea prepares for LTE launch

June 27th, 2016, by

Network deployment costs are high in PNG due to the relatively low subscriber base, the impervious terrain, and the high proportion of the population living in rural areas. As a result, fixed telecom infrastructure is almost inexistent outside urban centres, leaving most of the population unserviced. With fixed teledensity having seen little change over the past two decades, progress in telecommunications has come primarily from mobile networks, where accessibility has expanded from less than 3% population coverage in 2006 to over 80% by early 2016.

This impressive growth was triggered by the start of mobile competition in 2007. When it entered the market, competing mobile operator Digicel brought mobile services to previously unserviced areas and at the same time slashed prices. The result was a substantial increase in mobile penetration – from 1.6% in 2006 to 49% by early 2016. This remains low by international standards, and though there remains considerable room for growth this could be stymied by the latent difficulties within the market, including the high cost of deploying infrastructure, the relatively low income base among potential subscribers, and the geographical dispersal of the population. As a result of these conditions PNG remains one of the least affordable mobile markets in the Pacific.

Despite the opening of the market to competition, internet access is expensive in PNG and far beyond the means of most of the population. Throughout much of the country, internet access is simply unavailable. Mobile coverage into 2016 is extensive, though most rural areas still have only 2G services.

Nevertheless, mobile broadband is proving far more successful than fixed-line broadband, and both Telikom and Digicel are planning to provide LTE services by the end of 2016. The number of mobile broadband users is expected to continue to grow strongly as these operators expand their 3G and LTE networks in the coming years.

To overcome the country’s communication shortcomings, the government is deploying a National Transmission Network, which is expected to boost bandwidth and encourage market competition. It is managed by the state-owned PNG DataCo, which acts as wholesaler.

Given the underdeveloped telecom services, PNG’s telecom market has enormous growth potential. Despite the challenges, the country offers many investment opportunities. An increasing number of Papuans are embracing the digital age, particularly the younger generation, and mobile phones in particular are becoming a more important source of social interaction.

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

We invite your comments: Please click here to comment

Tagged in: , , , , , , , ,

Tesla doing a Google in the Australian electricity industry?

June 24th, 2016, by

One of the issues that I often spoke about during my time as a former director of the Global Smart Grid Federation  was that the electricity industry would have to go through a similar transformation process to the one the telecoms industry went through 20+ years ago upon the arrival of the internet. I warned that there was no doubt that eventually a Google-like company would step in and disrupt the electricity industry like Google and others did in the telecoms industry.

It is now 10 years later and we still haven’t seen decisive action from many of the electricity companies. It is extremely difficult for these incumbent players to actually make the transition without clear government direction, and, as a very senior electricity executive once said to me, it will be nearly impossible for the industry to do this on its own without strong government leadership. He argued that without strong action the electricity distribution companies might be relegated to simple pipe operators, and that in those circumstances there was little hope for the traditional incumbent players.

I think that we can now see the Google of the electricity industry appearing on the horizon in the form of Tesla.

Tesla is certainly not an unknown company in the industry in relation to electric vehicles and battery storage systems, but recent acquisitions are making it clear that the company is aiming for nothing less than an end-to-end power supply, storage and distribution supplier, totally based on renewable energy. As a new, innovative and cash-rich company it can, like Google, Facebook and others, expand these systems globally. So rather than disruption operating on a country-by-country basis, the change would be led by a global company. Obviously an electricity utility is rather different from an internet utility; and in relation to infrastructure it is far more complex. Of course national systems will have to be developed, but nevertheless a global concept has now been placed on the table. As with the internet companies, starting new systems from scratch is far easier and cheaper than upgrading the old big-iron grid and its systems.

We have seen that these internet companies have been able to reduce the traditional costs by up to 80% and they have wiped (or are in the process of wiping) total sectors. This process will no doubt be replicated in the energy industry.

Obviously there are many more issues attached to this. Electricity is an absolutely essential utility for our society and economy and within this transformation the big grid will remain an important element for many decades to come.

How this will all develop remains an uncertainty and it will be messy, but one thing is certain – things won’t be the same once Tesla starts rolling out its own end-to-end power systems around the world. Obviously it won’t happen overnight. It will take decades to accomplish. Furthermore, there is nothing stopping local utilities from partnering with Tesla and, by so doing, becoming part of the solution.

It is now approaching two minutes to midnight for the utilities to decide if and where they want to play in this new industry, and this will be a tough decision for them. Sitting on the fence and waiting for the government to show some form is leadership is no longer an option. Obviously if there are no clear government policies relating to where the country as a nation wants to go, those organisations will find it even more difficult to make the right decisions. In Australia current government policies are actually working against such a transformation process and this will make it an uphill battle for the organisations involved to plan their future.

Hopefully the move from Tesla will be a wake-up call for all involved to finally start making some serious decisions about the future of the electricity industry in each individual country.

Paul Budde

See also:

We invite your comments: Please click here to comment

Tagged in: , , , ,

The NBN in mid-2016

June 24th, 2016, by

In our city office we now have a fibre-to-the-basement (FttB) connection, delivering a service of very close to 100Mb/s – while in the Bucketty office in the Hunter Valley we have the 25Mb/s satellite-based Sky Muster service.

At the moment we use Sky Muster in the house and leave the office on our ADSL service, which, to be honest, has served us very well for more than a decade. We need to fully understand the satellite’s latency issue before we can consider the satellite service (which is obviously faster) for office applications such as our VPN and cloud applications.

So most certainly progress has been made with the NBN. After years of delays because of changes to the plans and the various associated troubles the NBN company now seems to be on top of the rollout and is rapidly delivering its FttN service across the country. And, yes, they can be congratulated for that.

As it now stands FttH will connect 26% of premises by 2020, while a further 44% will be served by FttN, and the remaining 30% will receive services via existing HFC networks. Using this approach, the government anticipated that 91% of premises connected to fixed-line infrastructure would receive 50Mb/s by 2020.

We remain disappointed with the government (rather than the NBN company) as they have abandoned the original plan of bringing FttH to 93% of the population. According to our analyses that would have future-proofed the digital infrastructure the country will eventually need. At a future date the current FttN and HFC networks will need to upgraded to a full fibre network (at least one that delivers a fibre connection to the doorstep from where it can be connected through a so-called distribution point (Fttdp) under the pavement into the home, basically delivering a similar service to the one we get in our Sydney office (FttB).

This upgrade is based, not simply on the speeds delivered over such networks, but more importantly on the costs of maintaining the old networks. This is already reaching a point where, in most cases, the FttH has become the preferred option among telcos around the world. We have often used the steam train analogy here. At the height of its success it could run at 220km per hour – very fast, even for today’s train services – yet maintaining these trains was simply no longer economically viable.

The NBN company is on record as having a positive view on the Fttdp, but the politics are not yet in place to allow this to happen on a larger scale. The Labor party has indicated it will deliver an extra 2 million fibre connections (FttH and FttDP) if it is elected. FttDP is further discussed in the analysis below.

There are also issues in relation to the HFC network. Developments in the USA in particular are starting to indicate that it is cheaper to upgrade to FttH than to upgrade the old HFC systems. This will also be discussed below.

While the NBN company is successfully rolling out its services – on track to connect over 3.1 million premises by September 2016 – they do encounter the predictable problems inherent in trying to upgrade an old network based on an old technology. The Central Coast of NSW is hit particularly hard, with ongoing problems due to a range of issues, including backhaul. Massive disruptions in both telephony and broadband are frustrating hundreds of people in this area. But problems of this type will eventually be resolved.

More importantly, once this all behind them the users will still be left with a second-rate network. While the government is claiming that today the majority of people are happy with a 25Mb/s service, the issue is not today, but over the next 3,5-10 years and beyond. I am sure the government is not making a $56 billion investment simply to satisfy today’s demand – one would hope that such an investment is based on a long-term plan.

Tellingly, the government doesn’t feature the NBN in policies such as smart cities and innovation. Any other government in the world would have linked the network to its policies in relation to high-speed broadband. If one talks about innovation this will, in one way or another, always involve ICT-based developments and there will be few start-ups and digital entrepreneurs that will be able to develop such businesses based on a second- rate network.

Furthermore, the business model of the NBN company is also starting to look shaky. It is no longer the premium infrastructure and it will find it difficult to differentiate itself from other developments – such as the FttB and FttH greenfield services from its competitors – as well as from further developments in mobile broadband based on improvements in 4G LTE and the upcoming 5G infrastructure. This means lower revenues for the NBN company. The question has already been asked as to whether it will ever be able to recoup its investments in the case of it being privatised, as is planned at the end of its journey. It will also be difficult to find the funds necessary to upgrade from FttN to FttH.

When the original FttH plan was launched we supported a regulatory ban on cherry-picking; however, with the abandonment of the premier infrastructure plan, the cherry-picking rule should be abandoned also, especially as private telecom companies are increasingly indicating that they see a market for the rollout of FttH, without going through the costly intermediate step of putting nodes in the middle of the network. These are becoming roadblocks towards a more modern infrastructure development. Under current regulation such projects are not allowed and as such are hampering innovation.

What do all these delays and second-rate plans mean? When Australia began the discussion on its broadband future back in 2005 a key reason to warrant national attention and national investment was that Australia had dropped to around the 25th position on the international level that measured national broadband services. Suburban, regional and rural broadband in particular was very poor. Telstra had a stranglehold on the market and there was little indication that this situation would change any time soon without government intervention.

When the NBN was launched in 2009 one of the goals was to get the country into the top ten of the international ladder. Now, in 2016, we have dropped to the 45th position. With the rest of the world now moving clearly towards FttH Australia is set to linger on at the bottom of the international ladder for many years to come. Yes, the situation will most certainly improve, but there is no chance of the country ending up in the top ten in the near future.

Does this matter? We would say yes, as internationally high-speed broadband is seen as an important economic development. It is essential in order to increase productivity, to become more competitive and to develop new high-value jobs. Given the digital disruption that is taking place because of technological changes, we need to make sure that Australian society and its economy are ready and able to transform into one that facilitates the new sharing and networking economy models.

After the mining boom it is clear that Australia needs to diversify and that our very poor level of productivity needs to be improved. And the digital economy is key in that. If we want to be competitive in our Asian and globalised markets we need to lift our digital profile among our trading partners, and the NBN is a major factor in that. We shouldn’t stop at the already out-of-date multi-mix technologies – these should be extended as soon as possible to a fully-blown FttH network, in line with what other developed nations are building.

See also:

We invite your comments: Please click here to comment

Tagged in: , , , , , , , ,

Analysis of the global telecoms industry in 2016

June 23rd, 2016, by

The telecoms industry represents one of the most dynamic sectors in the world. Only 25 years ago 90% of all activities took place via telephone calls over fixed telephone lines. Now, within the broader ICT industry, telecoms is underpinning all of the new developments in relation to the digital, sharing and interconnected economies. It facilitates new social and economic developments in all sectors such as e-health, e-education, e-business, smart grids, smart cities, e-government, and so on.

Furthermore it is a key factor in improving people’s lifestyle, delivering a whole range of social benefits. And this is not just the case in the developed world, where the smart phone is now omnipotent. One only has to look at the effect mobile phones have on the lives and the livelihood of many of the people in Africa, Asia and South America. It is just mindboggling, even with simple applications such as SMS.

The impact on the business and professional markets is that ICT is increasingly becoming a critical business element in their day-to-day operations, and it is clear that many sectors and individual organisations will have to transform themselves if they wish to remain competitive and to participate in the rapidly changing business models in which ICT is becoming a critical business tool.

Close to 70% of the global population now has access to telecoms services through mobile phones, the internet and social media. This shows that the developments are very much grassroots-driven – in other words, this is demand- rather than supply-driven.

The importance of broadband

It is clear that the incumbent telecommunication providers have great difficulty keeping up with the demand in telecoms services. Some US$200 billion is spent every year to fix problems in their networks, and this is on top of their normal maintenance activities.

The new digital services that people and businesses expect require infrastructure that has high capacity, low latency, high levels of reliability, is secure, protects privacy and so on; and only fibre networks can deliver this. We already see that this year for the first time there is, percentage-wise, more fibre in the global telecoms infrastructure than copper, and this will slowly but steadily increase over the next 5 to 10 years. This also applies to mobile networks – in the end mobile networks are fibre networks with only a last mile wireless component.

Governments have begun to understand the critical need for high-quality broadband networks for their social and economic development, and they are developing policies that are aimed at improving the quality of their national infrastructure. I was the co-initiator of the UN Broadband Commission for Digital Development and globally there are now 140+ countries that have national broadband plans in place. Of course, implementing these plans is not easy, but good progress is made every year.

As a telecoms advisor to the UN, as well as to national governments, I have had personal experience with the development of broadband policies in the USA, UK, Ireland, Netherlands, Australia, New Zealand and Qatar, and it is very rewarding to see that several of these countries are among the world leaders in these developments.

The digital, sharing and interconnected economy

Developments, strongly facilitated by developments in the ICT industry, are leading to massive economic transformation processes. We see that whole industry sectors and traditional business models have been replaced by new ones. The key reason for these transformations is that in some instances up to 80% of the costs of those traditional business models can be removed.

These processes are relentless and are going to force other sectors to transform as well. Developments linked to this include cloud computing, data centres, data analytics (big data), machine-to-machine (M2M), the internet-of-things (IoT) and blockchain.

The latter, especially, will have an enormous effect on the financial market, and it is going to take out significant costs – in this case in transaction processes. How this will all pan out is still uncertain but the fact that nearly all banks are looking seriously into this is a clear indication that it will potentially have an enormous effect on their businesses.

By removing the complexity from these systems others can now far more easily participate, and the question comes up as to whether these banks will still need to be the middle men in many of these processes. In the digital, sharing and interconnected economy other arrangements for transactions can also be developed, and bitcoin (as a subset of blockchain) is one such option. Its success has so far been limited mainly to criminal activities and the so-called dark internet, but this doesn’t mean that our inventive minds will not come up with better, more law-abiding applications in the near future.

Mobile payments are revolutionising the financial world in developing countries. In these countries most people don’t have a credit card – often don’t even have a bank account – and so entirely new financial systems are being developed through their mobile phones, linked to mobile payment systems, where the banks are no longer necessarily the leading parties.

In the communities-based sharing economy we see, in some cases, money disappearing altogether – people exchanging services in-kind – and, in other situations, the sharing economy facilitates extending voluntary services within the various communities. This will no doubt lead to other social innovations being developed.

Looking at all of the above the future of telecoms is very bright indeed, as people will want to access more and more services through telecommunications. This will drive the already massive investments that are taking place worldwide in infrastructure, devices and services:  ICT investments are estimated at around US$3.5 trillion every single year.

Paul Budde

See also:

We invite your comments: Please click here to comment

Tagged in: , , , , , ,