How independent is NBN Co?

September 23rd, 2014, by

If we listen to comments made by the chairman and the CEO of NBN Co regarding the current plan one would have to ask who is running the company. The current NBN Co team is certainly raising some key issues:

  • they have questions regarding some of the conclusions of the Vertigan report;
  • they are more positive about their new radically changed FttP model;
  • they are worried about the government allowing competition in the FttB space; and
  • they have questions about the long-term financial constraints put on them by the government.

The question, therefore is – is it the company itself running the business, or is it the minister and his advisers?

The minister has consistently blamed the previous government for all the mistakes NBN Co made under its watch, but what will happen after the next election? Will a new government (if that is the outcome) have a similar right, to blame this government not only for a lack of vision but also for its own interference in the technical choices and other affairs of NBN Co?

What was launched as a political attack on the previous government, a so-called faster and cheaper NBN solution based on the multi-mix technology, became full-blown government policy simply through the appointment of the right people – those who would agree with this policy – and the ensuing claim that this is indeed the best solution, despite the fact that international evidence paints a totally different picture.

In relation to ‘faster’ there have been ongoing delays, both with the numerous investigations and with the rollout – with further delays anticipated now well into 2015. While there is no doubt that good work has been done to fix the rollout problems that they inherited, it was very clear from the beginning that ‘sooner’ would be one of those political non-core promises.

While the minister has always claimed to be technology-agnostic and regularly steps back and says publicly that the technology choice is that of NBN Co, the company knows that the minister is absolutely committed to his own policy guidelines. So what is the difference here between the previous minister, Stephen Conroy, and Mr Turnbull in relation to the degree of political interference in the NBN?

NBN Co remains a political football. It is almost a matrix moment for NBN Co – choose the red pill or the blue pill. But we all know what happened to the previous NBN Co management team. Remember how quickly that team was ‘flushed’ when they were assessed to be determined to continually state ‘the inconvenient truth’.

This despite the fact that this same team was supported by all its partners and won the admiration of the Australian telecoms industry, as well as that of many outside Australia. The international press raved about Australia’s bold plan.  Many held up the Australian NBN as a shining light – that it was actually grasping the nettle and realising that fibre was in fact a utility commodity. The Australian initiative was instrumental in the formation of the UN Broadband Commission. And 70% of the Australian population prefers the original plan.

So, were all those people wrong?

The same people are now shaking their heads at the farce it has become – a Communications Minister publicly supporting a study that states that a consumer will only need 15Mb/s in 2023.

This was also questioned by Bill Morrow. But was he allowed to look at his company’s own radically changed FttP plan that could indeed deliver FttP in a competitive way? And was NBN Co, for example, allowed to look at FttP rollout plans along the lines of the models used by Google in the USA (seeking active participation of their customers in planning their rollouts); or those used in the Netherlands (working with local councils that are eager to deliver FttP to their businesses and residents)? These are all cost-saving alternatives with a proven record overseas.

If the minister is genuine about being independent and serious regarding his own statement that FttP is the best end solution, why aren’t we investigating it?

Paul Budde

See also:

Australia – National Broadband Network – Developments and Analyses 2014

Australia – National Broadband Network – Infrastructure Analysis

Australia – National Broadband Network – NBN Co 2.0

Australia – The National Broadband Network

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Colombia – Mobile network operators expand LTE services following a key spectrum auction

September 23rd, 2014, by

Colombia is included in a group of up-and-coming nations (dubbed CIVETS) which have considerable potential for investors in a range of sectors, including telecommunications. To encourage foreign investment the government, in office since 2010, is shaking off the country’s image as a trouble spot.

Mobile penetration is relatively high for the region. While market growth has slowed in recent years, it retains significant potential, particularly in the mobile broadband sector, which in 2014 has begun to develop rapidly as the five licensees which were awarded spectrum at auction in mid-2014 began to launch commercial LTE services. The market is dominated by three MNOs (Claro, Movistar, and Tigo) though there is a lively MVNO sector to provide additional competition. These include Uff! Móvil, ETB, Móvil Éxito and Virgin Mobile.

Fixed-line teledensity in Colombia is well below the Latin American average. The number of lines in service continues to fall steadily, with customers abandoning traditional phones in favour of mobile and VoIP services. As in other Latin American countries, most of the existing fixed telephone lines are concentrated in the larger cities, leaving the rest of the population under-serviced.

Over the last several years the telecom market has seen a number of mergers, which has intensified competition among the major players. In mid-2014 Tigo merged with the municipally-owned UNE-EPM, enabling the operators to develop converged fixed and mobile services.

Colombia’s broadband penetration is relatively high for the region, though it has been hampered by poor fixed-line infrastructure in many areas of the country. The government has launched several initiatives to increase broadband take-up, including the Vive Digital program and the National Fibre Optic Project.

A new Buddecomm report provides an overview of Colombia’s telecom market and regulatory environment. It incorporates insights into the mobile market, including key market statistics and analyses as well as profiles of the major mobile operators, as well as an overview of the broadband and pay TV markets, including scenario forecasts.

For detailed information, table of contents and pricing see: Colombia – Telecoms, IP Networks, Digital Media and Forecasts

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Fetch TV championing the one-stop-shop approach to video entertainment

September 22nd, 2014, by

With, in general, very little difference between the various commercial video entertainment content offerings – especially in a country like Australia where content has been stitched up by the incumbents through long-term contracts with, for example, the Hollywood Studios and the various sporting organisations – differentiation on content alone is not easy.

And so the basic strategy behind the video entertainment platform, businesses needs to be different, focussing on markets that are appealing to the ‘no hassle’ one-stop-shop model. Companies like Fetch TV offer their viewers a superior customer experience. Personal experience here is that the whole installation can be done within 15 minutes by any non-technology-savvyperson.

In order to be successful in a one-stop-shop market you need to be able to offer:

  • A very attractive platform with lots of interesting new services
  • Availability of FtA, catch-up services linked to PVR features
  • An attractive platform technology-wise, with ease of use appeal, user-friendliness, and removing the hassle of getting all the various services and boxes operating in your home (PVR, wireless, free-to-air, VOD).
  • Unique content – for example, access to Australian content not available from the overseas providers.

Fetch TV and Telstra T-Box are using this combined set of features to differentiate themselves from companies such as Netflix.

Fetch TV has positioning itself as the wholesale content provider to all the other telcos and ISPs, apart from Telstra. They include: Optus, iiNet, and soon M2. They have also launched a retail initiative in Harvey Norman stores.

However, all of these one-stop elements need to be perfect – they need to offer the customer a premium experience above what is available in the market from all the other players. In the case of Telstra T-Box for instance, it has been argued that their technical platform has technical problems and is not particularly user-friendly, and as a result it is estimated that half of the boxes it has provided are not used.

Without a good value proposition customers will simply bypass these proprietary systems and use the direct access services from Netflix, Quickflix, Chromecast, iTunes, YouTube and the many other services that are already there – and the many more that will certainly arrive, like Stream Co from the Nine network and Fairfax.

Fetch is positioning itself in particular as the alternative to Telstra T-Box and Foxtel and at this stage certainly is delivering the best one-stop-shop service on a very user-friendly platform. On the content side it also has made good progress in matching Foxtel on key linear channels from the likes of Discovery, National Geographic, MTV, Disney, Nickelodeon, ESPN, NBCU, and the BBC.

Their inclusion of the traditional broadcasting channels (FtA and subscription ones) linked to the other platform features are also proving to be popular among its users.  In relation to  movies, the Hollywood viewing windows available for OTT SVOD services tend to be well behind availability for transactional services, and FtA channels and/or branded subscription channels (generally 1-2 seasons behind).  For this reason FtA channels and Foxtel / Fetch TV can offer the best of both worlds, with access to current seasons plus the ability to offer these shows on demand via a PVR (personal video recorder also referred to as a digital video reorder –DVR) or catch up services.  Only Foxtel / Telstra and Fetch TV currently offer the combined FtA/PVR option.

The company has made slow but steady progress. Unlike as is the case with some of the other services, most of their customers remain connected and there is little churn. Their total numbers of subscribers stands at the moment at 140,000. The company is now also EBITDA positive with no debt.

Paul Budde

See our new report: Australia – Competition is hotting up in the Video Entertainment market

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Vanuatu’s telecom sector ready for change with the launch of a submarine cable

September 22nd, 2014, by

Background

Telecom Vanuatu Ltd (TVL) is the only provider of fixed-line telephony, but its licence is non-exclusive. In the mobile market, TVL competes with Digicel, which entered Vanuatu in 2008. Several companies compete in the internet/broadband market, but broadband penetration is still negligible, due to high prices and poor coverage. Nevertheless, this could change in the short term as a submarine cable system, Interchange Cable Network 1 (ICN1), became operational in January 2014. This is a significant milestone in Vanuatu’s telecom development as it removes the country’s dependence on satellite.

Mobile voice and data market

Mobile phones have become the primary mode of communication across the country, bringing deep social changes. Almost all of the population is covered by a mobile network, and almost all households have at least one mobile phone. Both TVL and Digicel offer mobile broadband using HSPA technology, although coverage is more restricted than the GSM/EDGE network. Mobile internet services over EDGE or HSPA are becoming more and more popular, with subscribers far outnumbering fixed broadband lines.

Universal Access Policy

A Universal Access Policy (UAP) passed in November 2013 aims to make the following ICT services available to 98% of the population by 2018: voice communication; narrowband data services, including text messaging; broadband with a download speed of at least 21Mb/s and an upload speed of at least 12Mb/s. The UAP fund is subsidised primarily by AusAID.

BuddeComm’s report Vanuatu – Telecoms, Mobile and Broadband – Market Insights and Statistics provides a comprehensive overview of the trends and developments in the telecommunications market of Vanuatu, including industry and operator data updates and estimates through to 2014.

For detailed information, table of contents and pricing see: Vanuatu – Telecoms, Mobile and Broadband – Market Insights and Statistics

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As mobile market growth slowed in Brunei, B-Mobile’s future remained the big question

September 19th, 2014, by

This report looks at the telecommunications market in Brunei Darussalam. A small wealthy nation in South East Asia, Brunei made early moves to ensure that it was delivering up to date telecommunications services to its population. The target of 100% digitalisation was achieved back in 1995. Telecommunications infrastructure and services throughout Brunei are of a generally high standard and the country ranks well in Asia in terms of both telecom service penetration and infrastructure facilities. Brunei’s mobile penetration, which stood at an already healthy 32% by 2001, has continued to expand and coming into 2014 it had reached a penetration of 115%. Growth in total mobile subscribers had slowed in recent years as customers moved to take up mobile broadband offerings.

By contrast to the strong mobile market, the fixed-line segment has been completely overwhelmed by emergence of a strong mobile sector. Earlier on, before mobile services gained the ascendancy, the government set a national goal of a 40% fixed-line penetration rate by 2001; it came as no surprise that Jabatan Telekom Brunei (JTB), the incumbent telecom operator, fell well short of this target as the industry focus swung strongly towards mobile services. The country actually reached just over 26% fixed-line penetration by 2001; fixed-line services have been in a steady decline ever since (falling to 14% by end-2013).

It is not surprising that the citizens of Brunei are strong consumers of telecom services, given the level of encouragement coming from the government and the high level of GDP per capita. Despite the overall positive situation, if the country is to continue to maintain the pace required to be globally competitive, it must further restructure and generally liberalise the local telecom industry. Brunei’s telecom regulator, the Authority for Info-communications Technology Industry (AITI), was established in 2003. Although seen as a positive step, the creation of a new regulator has not really accelerated telecom reform to any extent.

The local market has continued to be dominated first by JTB and then by Telekom Brunei (TelBru), JTB’s corporatised successor; although there are plans to privatise the incumbent telco, it remains for the time being under the wing of the government. It was a significant step in 2006, when the Department of Economic Planning and Development announced the corporatisation of JTB. However, much more remains to be done in the area of sector reform.

By early 2013 the country’s telecom regulator, the AITI, was expressing concern about the performance of B-Mobile. The smaller of the two mobile operators, B-Mobile had managed to maintain a subscriber base of close to 20% of the country’s total mobile market up until 2012. However, it had experienced serious network performance problems and was also rumoured to be struggling financially. In a surprise move, parent Telekom Brunei submitted a petition to Brunei’s Supreme Court in 2013 seeking to wind up its subsidiary B-Mobile. The mobile operator was continuing to function into 2014, but there remained major issues to be addressed. A meeting of creditors in early 2014 signalled a new phase in developments.

While Brunei’s economy is not heavily exposed to the global capital markets, the 2008/2009 global financial crisis did impact on Brunei. Although the country’s banks were also well placed to manage any period of economic difficulty, the country was definitely not isolated from what was happening globally. The fall in oil prices triggered by the global economic crisis and subsequent decline in energy production saw Brunei’s GDP contract by almost 2% in 2008 and again in 2009. The economy recovered sufficiently for GDP growth to be positive again by 2010, returning an annual growth rate of nearly 3%. Growth has since been due in part to more favourable external conditions and the large fiscal and current account surpluses built up in recent years. The IMF was forecasting annual growth of 6%-7% for Brunei in 2014/2015.

For detailed information, table of contents and pricing see: Brunei Darussalam – Telecoms, Mobile and Broadband

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