Report from the World Mobile Congress in Barcelona

March 3rd, 2015, by

One of the biggest telecom events in the world, now in its 10th year,  the GSMA Global World Congress, is attracting 90,000 visitors this year. Why are so many people flocking to this event?

Obviously telecoms and in particular mobile has become one of the biggest industries in the world, hundreds of billions of dollars are invested every year and the market simply keeps growing. However, that is not enough to warrant this large number of visitors. The reason is that yes this is indeed one of the most important industries but nobody actually knows where this industry can lead to; it is full of surprises, new technologies and innovations. For companies involved in this industry, just making appointments with their key suppliers in order to stay abreast is not enough as new developments, critical to organisations, could well come from totally new directions, so going to Barcelona, to the biggest mobile show on earth is a good way of looking around for what is brewing.

For the same reason those who depend on the mobile industry are also opening offices in the innovation centres in the world not just in Silicon Valley and Bangalore, but also in minor innovation centres such as Rwanda just to make sure that they are not missing out on key new innovations.

As an example m-payment developments are lead from Africa and Asia with 250 services and 100 million users and in 16 countries there are now more mobile bank accounts than there are traditional bank accounts. A range of innovative start ups are now offering a range of very innovative banking, loan and payment services, simply because the traditional banking sectors have missed the boat. Lessons learnt and new developments occurring here could be of critical importance to the financial market elsewhere.

However, innovation is not just a matter of products and services, far more important innovation is needed on an organisational and a systems level. The future will be about sharing and business models such as Uber and AirBB have been used by us on many occasions to show what ‘sharing’ really means. In order to grow the market all infrastructure should be shared and interconnected (fixed, wireless, IT, data, etc). All of this should be agnostic and treated as a utility. On top of this real services that are of value to customers at prices that are affordable can be built.

Tim Höttges the CEO of Deutsche Telekom indicated that from a technology point this means that what we will see is: softwarisation, virtualisation, convergence (of infrastructure) and data analytics (connecting different value chains). I would like to add gamification to this for education purposes, the end result for customers will have to be that use of services, applications and devices has to be effortless.

There is a real understanding that mobile, broadband and cloud computing are absolutely transforming whole industry sectors and those who embrace this are both in front of the pack (and the various challenges) and  they are the ones that are able the reap the first benefits of these changes.

Another absolute key area is data and the need for connected data management. Currently 90% of data is locked up in silos and proprietary systems that makes it basically unusable for the new environment we are entering, this is also called ‘black data’. However, as we have discussed before new developments are taking place that can unlock this data.

At the Congress all speakers mentioned the massive changes in business models and the need for deep organisational changes in order to be able to participate in these changes. The other key areas addressed by all were security, privacy and ‘effortless’. The broader industry totally depends on trust – something the telecoms industry is very familiar with – and if those issues are not properly addressed this could severely hamper the growth of the industry. ‘Effortless’ was mentioned in relation to intuitive use.

What do customers want from mobile operators?

  • Quality measured in speed, coverage, coverage and content (they enjoy digital and they like the way they can now use entertainment).
  • Good value (they are still worried about roaming and accessing mobile broadband).
  • Privacy and security (they want both)
  • Competition and choice.

 

Not yet so clear in their minds but they also want what can be translated into smart cities, buildings, transport, healthcare, education, etc.

(Source: Vodafone at Barcelona Mobile World Congress 2015)

Obviously also at this event the telco operators used the opportunity to keep on complaining about the ‘free ride’ that the OTT players are getting and they continued their call to bring the OTT players within the same regulatory environment they have to operate in.

While most of this is self-serving there certainly are issues moving forward, there is a clash of business models which is not in the interest of the customer nor in the interest of the long term health of the industries involved. The control that companies such as Google, Facebook and Amazon exert is increasing by the day, with very little interest to open up their systems in the same way they advocate to open telecoms systems. There is still no permission based system in place that give customers full control over their data. Furthermore what are now different industries, are merging deeper and deeper and there is increasingly less difference between telcos, ISPs, broadcasters, OTT companies and other digital internet organisations. A radical review and regulatory reorganisation of this market will have to happen sooner rather than later.

While a few years ago it could be argued that the telcos also would have to adjust and transform their organisations and business models; several of them are now well and truly underway in doing so. While still significant costs will have to be taken out of the telecoms business before a true convergence with the other groups can take place, it is now of matter of when rather than if.

Paul Budde

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The next stage of the broadbanding of the world

March 2nd, 2015, by

The UN Broadband Commission – which I assisted in establishing and to which I am special advisor – is now in its fifth year. Set up by the two UN agencies, UNESCO and ITU, it received the support of 50 leading international people such as government ministers, heads of a range of UN and associated organisations, and CEOs of leading private industry companies. Overall it is a public-private partnership. It is chaired by the President of Rwanda, Paul Kagame, and Carlos Slim from Mexico.

The Commission has been instrumental in spreading the message of the important social and economic benefits that are delivered by broadband (and ICT in general), and as a result 140 countries around the world now have a national broadband plan. The Commission established its credibility through the publication of a large number of authoritative reports on the application of broadband for the national benefit and it has built a strong team of people who can assist in international lobbying and national mentoring.

Looking back, significant progress can also be seen within organisations such as, for example, UNESCO and the World Bank. Five years ago broadband hardly featured in their programs, but broadband and ICT are now front and centre as tools for social and economic developments.

Nevertheless a great deal of work still needs to done to ensure horizontal action within these organisations – their organisational structures are often not well-suited to the development of holistic programs.

It has been estimated that to connect the 4 billion people that currently do not have broadband access to the internet could cost as much as $1 trillion dollars; but if this can be addressed in a holistic way these costs could drop to perhaps as low as $200 billion.

However at the 11th meeting of the Commission at UNESCO in Paris last week the discussion focused on the fact that the world is moving on, that in general the global lobbying has done its job, and that the Commission will now have to take the next steps forward.

These steps are not straightforward because the whole issue of social and economic development is complex. Broadband access, and ICT in general, can only do their job if a range of basic elements is in place – stable government, good governance, secure environment that can be trusted by the users, a strong focus on eliminating corruption and in general the availability of good and transparent financial, legal and administrative structures. In addition, translating access and information into knowledge requires significantly more work.

In countries where these elements are in place internet penetration has increased over the last decade, from less than 10% to 60% and 70%.

However, in the 49 least developed countries, where most of these structures are not in place, penetration remains under 10%. These include several countries where civil war and terrorism are rife and where corruption is the norm rather than the exception. It is estimated that these failed, or partly failed, states (or regions within certain states) account for 10%-20% of the people and that very little can be achieved with broadband or ICT unless the basic elements mentioned above are in place.

In between these two groups is a large number of countries that need more help to move broadband further.

In these countries having a national broadband plan doesn’t necessarily mean that it is being actively implemented. Unless there is strong leadership from the top very little happens beyond pilots and projects. Countries where governments put a strong focus on a holistic approach are often doing exceptionally well. These include India, China, Malaysia, Chile, Rwanda and many others – in fact further progress there is now unstoppable.

The Commission is considering a range of actions. Key areas where further developments will greatly benefit their societies are education and healthcare; both these sectors have greatly disappointed in embracing ICTs to transform their organisations so as to be able to more efficiently and effectively distribute their services to their communities. Back in 2000 the UN set a goal that by 2015 all schools should be linked to the internet; the reality, however, is that perhaps as many as half the schools in the developing economies are still not connected.

Unfortunately these sectors are notoriously reactionary and siloed, often with archaic organisational structures that strenuously resist change. The Commission could concentrate on these sectors to see if progress can be speeded up. At the same time it is very clear that ICTs on their own won’t do the job. Action plans will need to be developed in the context of local governance, policies and politics, and local cultures and traditions. This also requires a change of the ICT industry involved in developing technology plans for these countries and regions.

It was also argued that in order to break through these silos, instead of trying to apply broadband and ICT to assist these sectors to transform themselves, it would perhaps be better to actually use broadband and ICT to develop radically new systems, structures, products and services. As a matter of fact, the development of health-related applications and wearable technologies is a clear indication that the world is not waiting around for these sectors to change – wherever possible people will bypass those inflexible systems.

As the meeting took place at UNESCO, its Director General Irina Bokova used the opportunity to organise a meeting between the Commission and the UNESCO Ambassadors of the member countries.

In its discussion with governments and other authorities, the Commission is often preaching to the converted (Ministers for Communications, Regulators, ICT advisers, etc), so connecting with other decision-makers in sectors such as education and healthcare will lead to a far better ecosystem being developed that will hopefully result in more local experts on the ground – who can act as agents of change – to help their countries to further develop the benefits of broadband. Further work will be done to establish such structures.

The Commission also expressed serious concerns about the very high level of unemployment among people aged between 19 and 29 years – in many countries between 30%-40% (and not just in developing economies). A lost generation like this means a lost opportunity for ICT-based developments, as it is this particular age group that can contribute most to such developments. UNESCO is working on programs to address this issue.

In the meantime those who have fully embraced broadband and ICTs and have created policies that will encourage strategic use of these tools are moving in the direction of fully-integrated structures such as smart communities, smart cities and smart nations. China now has many cities with smart city plans in place, Singapore has a smart nation plan and Barcelona – the city where I will report from next –receives awards year after year for being the leading smart city in the world, and consistently appears in the top ten list of global smart cities.

Here we are talking about LTEA – weaving 4G and WiFi together, 5G developments for M2M/IoT, open government, connected information management, big data, cloud computing and so on – all issues that the Broadband Commission discussed and will take on board in the next five years.

Data management is also seen as essential to get the much-needed hard evidence that can show that broadband and ICT do indeed have measurable positive social and economic outcomes.

Paul Budde

See Global – Infrastructure – The Broadband Commission for Digital Development

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Bosnia-Herzegovina struggling to maintain momentum for EU accession process

March 2nd, 2015, by

Bosnia-Herzegovina made remarkable economic progress since emerging from war in the 1990s to the financial turmoil of 2009. Since then the country’s economy has slowly recovered, though GDP is expected to reach only 0.5% in 2013 following negative growth in 2012. Future economic prosperity relies to a great extent on the country’s integration with the European Union. In preparation for eventual membership, the country has sought closer integration with the EU and adopted a range of commitments to political, economic, trade, and human rights reform. It has also aligned its telecom policies and regulatory measures to prepare it to compete effectively within the EU.

The market has been liberalised and a regulatory framework created based on the EU’s regulatory framework for communications, promoting competition as the most efficient way to offer communications products and services. Ongoing introduction of secondary legislation by the regulator is slowly improving the regulatory environment. To this end, the regulator has promoted fixed-line and mobile number portability, reduced interconnection tariffs and allowed the three incumbent operators to provide services outside their original concession areas.

The telecom market is characterised by three zones, each with an incumbent telco. The largest operator BH Telecom dominates in the FBiH, while Telekom Srpske operates in Republika Srpska and HT Mostar is active in Herzegovina.

The fixed-line broadband network is comparatively underdeveloped, with the result that investments made in 3G mobile upgrades by BH Mobile and Telekom Srpske will facilitate broadband connectivity in the country to a greater extent than is common elsewhere in Europe.

Although a number of fixed-line operators offer services the market is dominated by the three incumbent operators, which hold a combined market share of 99%. All three incumbents are subject to specific obligations designed to improve competition.

Internet services are available through the incumbents and alternative operators. Internet usage in Bosnia-Herzegovina is showing signs of significant growth on the back of competition and the improved availability of services.

The three mobile network operators (MNOs), each affiliated with one of the incumbent fixed-line operators, provide near-national coverage. Their networks, being upgraded to support services based on HSPA technology; will in coming years support broadband in rural areas where fixed-line infrastructure is insufficient. In addition, mobile data and mobile broadband offers will provide future revenue growth given the limited potential of mobile voice services.

Penetration of services Penetration
Fixed-line telephony 18.0%
Broadband 16.8%
Mobile phone 91.0%

(Source: BuddeComm based on industry data)

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

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Swisscom makes progress towards FttP goal for end-2015

February 28th, 2015, by

Although not a member of the EU, Switzerland’s economic integration has meant that its telecom market deregulation has followed the EU’s liberalisation framework, including recent regulations on international roaming.

Switzerland has Europe’s highest broadband penetration rate. The country benefits from universal DSL infrastructure and an expansive cable broadband network, with effective cross-platform competition. The DSL sector is dominated by Swisscom’s retail offerings, while UPC Cablecom also offers cable broadband in most cities and towns, and its extension of 250Mb/s services since 2014 has spurred Swisscom to intensify its VDSL and FttP network rollouts in a bid to remain competitive. To this end, Swisscom has set aside for fibre networks a significant proportion of its planned CHF8 billion infrastructure investment to 2015.

There has been a government focus on broadband deployment of ‘ultra-fast’ broadband, or that defined as at least 100Mb/s. This depends on the growing footprint of fibre, LTE and DOCSIS technologies. By the 2020, DOCSIS and fibre are expected to deliver 100Mb/s services to at least 80% of the population, while LTE should provide national coverage by that date.

The mobile market has undergone a number of changes in recent years, with the Orange Switzerland being acquired by NJJ Capital in February 2015, Sunrise being acquired by a private equity firm which completed an IPO in early 2015, and with the main cableco UPC Cablecom entering the mobile market as an MVNO, thus being able to provide a quad-play bundle and so compete more effectively with Sunrise and Swisscom. Mobile penetration is on a par with the European average while mobile data use among consumers has increased rapidly in line with the expended reach of technologies including HSPA and LTE. Customer use of mobile data services is helping to offset declining ARPU and lower traffic in the SMS segment as consumers adopt a range of OTT messaging services. The regulator has encouraged operators to share LTE infrastructure, so reducing investment costs, while all MNOs have launched commercial LTE services and have extended LTE-A technologies to increase data throughput. By early 2015 Orange had upgraded much of its LTE infrastructure to LTE-A, offering data at up to 300Mb/s. In addition, spectrum assets held by licenses have been successfully refarmed following the 2012 auction, so consolidating holdings. A further refarming exercise affecting the 2100MHz band is due in 2016.

A new BuddeComm report presents an analysis of Switzerland’s telecom market, including profiles of the main players in the fixed-line, DSL, cable, fibre and wireless sectors. It details technological developments, provides broadband subscriber forecasts to 2020, and examines regulatory issues related to municipal fibre, local loop unbundling, and the provision of broadband as a universal service. The report also assesses the country’s mobile market, including regulatory measures, profiles of the main providers, and analyses on service offerings, developments in mobile TV and emerging technologies.

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

 

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Network neutrality promising major changes in the USA

February 27th, 2015, by

The US broadband market is currently witnessing significant investment activity in fibre deployments, HFC upgrades and mobile broadband network rollouts. Much of the investment in fibre is being undertaken by a significant number of smaller players and municipalities rather than the two key telcos, which are concentrating on a hybrid fibre/copper network. The activities of market players such as Google, Cincinnati Bell and others have encouraged smaller carriers to continue to deploy fibre deeper into their networks.

Broadband services in most regions still lack effective competition, with the AT&T and Verizon managing an effective duopoly in many areas of the country. Municipal activity, often geared at breaking this stranglehold and introducing competition and innovation, continues to be stymied by lobbying pressure from these main telcos, which has led to at least 19 states banning or restricting municipal or state-led infrastructure projects.

There is now a growing consensus, supported by the President in his 2015 State of the Union address, that such restrictions should be lifted. The FCC Chairman also in February 2015 proposed measures which would reclassify broadband as a telecom service rather than a content service, and would extend network neutrality conditions to mobile broadband services. The FCC is also determined to use its authority to override restrictive state laws.

The US mobile subscriber base is approaching 340 million, and although growth has slowed with higher penetration levels, mobile data use remains strong in line with the fast development of LTE networks and the high take-up of smartphones, which now account for about 80% of all handset devices on mobile networks. Data revenue also continues to grow steadily year-on-year, though is subject to considerable price competition among the main players. A potential shift market dynamics can be expected in coming years following the FCC’s recommendation that mobile broadband be subject to network neutrality rules.

A new BuddeComm report provides an overview of the US broadband market, including FttP and other fibre network developments. It details the major fibre deployments and key market statistics and forecasts. The report also provides analyses, key statistics and forecasts on the US mobile market, including telcos’ financial and operating data to Q4 2014, and assessments of their strategies, regulatory policies, and market developments in emerging technologies.

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

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