India’s Mobile Market Continues to Boom

August 30th, 2016, by

Telecoms Infrastructure

Despite setbacks, India continues to be one of the fastest growing major telecom markets in the world. It is also one of the largest. Sweeping reforms introduced by successive Indian governments over the last decade have dramatically changed the nature of telecommunications in the country. By 2016 there were positive signs of a healthier regulatory environment taking shape. The government has been continuing to push to complete the restructuring of the telecommunications regulatory regime.

India’s mobile market continues to get the bulk of local capital expenditure as the operators expand their infrastructure. The mobile market continues to be the main focus of the Indian telecom sector. India has a huge national telecommunications network. The fixed line market in India remains highly underdeveloped due to the dominance of the mobile segment. Further, the number of fixed telephone lines is slowly declining as the mobile segment continues to expand. Overall penetration dropped from 2.1% in 2014 to 2.0% in 2015 and 1.9% in 2016.

With fixed-line penetration falling below 3%, the country has nevertheless achieved a remarkable coverage, 99% of the population having some form of access to a telephone. There has been heavy investment in telecoms infrastructure over the last decade to service the huge population. The government and the operators push forward on a number of fronts to speed up the roll-out of services to the wider population. Market leader BSNL’s market share has dropped significantly over the past six years due to growing market competition and the entry of new players in the market such as Vodafone.

In 2016 Vodafone signed an agreement to acquire cable broadband provider YOU Broadband for INR4 billion (USD59.9 million). The acquisition is part of Vodafone’s strategy of increasing its presence in the fixed broadband market. The takeover is expected to strengthen its mobile data services.

There has been a fresh effort to promote broadband throughout the country; after a period in which broadband development languished, and there is now hope for a serious expansion phase in this segment of the market. Mobile broadband has also impacted the market and by 2016 was already dramatically changing the internet sector.

Mobile Market

Over the past decade India’s mobile sector has developed a sustained momentum, aided by higher subscriber volumes, lower tariffs and falling handset prices. There had been a major push to take mobile services into the poorer and rural areas of the country, a move that inevitably weighed down on ARPU.

India’s mobile market dominates the local telecom sector with its large subscriber base and revenue numbers, as well as the huge capital investment by operators. It has continued to be a highly competitive market in which a number of major players together with a larger number of smaller players have been battling to increase market share.

Kazakhstan’s mobile market has experienced very strong growth over the last five years. Mobile penetration has risen from 72% in 2011 to 81% in 2016. The market remains highly competitive, but rather than a focus only on growth in subscribers the market is shifting to value-added. The roll-out of 4G / LTE services is driving significant shift to mobile data services across the country. Much will depend on the continuing resilience of the economy in India, with any drop in economic performance quickly triggering a drop in demand for mobile services. Further strong growth predicted over the next five years to 2021. By that year the market will reach mobile penetration of over 90%.

Significant market consolidation amongst the mobile operators was underway in 2016. The three-way merger of SSTL, RCOM and Aircel will establish a company with around 200 million customers, making it the second largest mobile operator by subscribers after Bharti Airtel, and just ahead of Vodafone.

Mobile broadband penetration has grown strongly in India over the past few years driven by a strong and growing mobile subscriber base. Further strong growth is predicted over the next year to 2017. Mobile broadband is set to grow exponentially throughout India, driving digital inclusion and economic growth for India’s consumers and businesses.

Despite its huge growth and its potential for further growth, the Indian telecoms market continued to present a number of challenges for mobile operators.

They have struggled to maintain Average Revenue per User (ARPU) levels. The country could boast some of the lowest mobile tariffs in the world, but at the time it also had one of the highest mobile usage levels in the world.

Fixed Broadband and Digital Economy

Despite a booming internet market across the country, India’s move into high-speed broadband internet access has been distinctly sluggish. When it came to high-speed broadband access, for long time there was a reluctance to adopt what was on offer, especially within the corporate sector, and the growth of broadband remained relatively slow for some time.

India’s fixed broadband market remains underdeveloped in India, mainly due to the dominance of the mobile platform and an unwillingness by operators to invest in fixed broadband infrastructure. Between 2011 and 2015, fixed broadband penetration increased only marginall. During 2015/16 the market grew by nearly 10% reaching. Moderate growth is predicted for the next five years to 2021.

In November 2015 Bharti Airtel allocated an investment of INR600 billion (USD9 billion) for the upgrade of its pan-Indian network over the next three years under ‘Project Leap’. In March 2016 Vodafone signed an agreement to acquire cable broadband provider YOU Broadband.

In December 2015 India’s telecom minister confirmed that the government has no plans to disinvest MTNL and BSNL.

By 2016 BSNL expected to shut down its WiMAX network in areas with small subscriber bases or where equipment has broken down. In June 2016 BSNL launched Wi-Fi Mobile Data Offloading Services (MDO) across the entire south

By 2016 India was making good progress on the government-mandated digitisation program. There are already rapidly expanding digital segments in the TV market, notably IPTV/Broadband TV and with some digitalisation of the traditional platforms proceeding at a good pace. The type of expansion being witnessed in digital media is expected to continue at an increased rate.

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

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The Author People – new developments in book publishing

August 30th, 2016, by

You might recall that a couple of years ago I was invited to be a member of the Government’s Book Industry Collaborative Council, looking at the effects that the digital disruption had on the book industry.

First of all, it is encouraging to see that I was correct in my predictions that books are here to stay for a very long time, simply because they fit in so well with our human behaviour. And, yes of course, e-books will take – and have already taken – their own rightful place in the broader publishing ecosystem. I made a bet with somebody (I wish I could remember who it was) for a bottle of red that this would be the case and it looks like I am winning that bet.

With eBook sales topping US$7 billion last year they certainly have had an enormous impact on the industry. This makes an interesting comparison with bookstore sales in America, where sales in those bookstores in the first half of 2009 were also worth around US$7 billion and then fell to US$5 billion during the first six months of 2014.

The biggest half-year drop in book sales however, occurred between 2011 and 2012 when business fell 10.5%, but then the turnaround occurred in 2015. The downward trend halted between January and June, with sales climbing a slight 1.9%. The whole of 2015 proved successful for bookstores, with sales rising 2.5% – the first annual gain for the sector since 2007.

Figures from the US Census Bureau reveal that this increase wasn’t a one-off event. In the first six months of 2016 sales at bookstores increased 6.1%, hitting $5.4 billion.

However, the digital disruption has changed the industry forever and another positive development has been that those involved in the industry started to look at the new opportunities that began to emerge within this digital disruption.

This brings me to one of my colleagues in the BICC. Lou Johnson at that time working for the publishing company Simon & Schuster. In the meantime she has quit that job in order to pursue her own venture, The Author People, a disruptive publishing model which she launched in October last year.

This company enables authors and people to connect in the ways that work best for them anywhere around the world. This may range from paper, digital and audio books to short form content, emerging digital content forms, social and traditional media, partnerships and events. They are also paving the way for them to connect in the future in ways we haven’t yet imagined.

The Author People can operate as the author’s co-producers and champions and provide tailored, collaborative, relevant and flexible support that can integrate publishing, outreach communications and author representation supported by global transactional capability. They utilise data and technology to inform decision-making and gain deep understanding of the author/people relationship to ensure they are providing the best possible experiences.

The way it works is that they first gain an understanding of an author, their work and their goals so that they can determine how they may be able to help. Then they assess if they are the right fit for each other.

The company is now in the process of transferring the business to an incorporated model and will be looking to raise working capital in order for them to build up the business.

Paul Budde

See also: Australia – Digital Economy – Book Industry – E-books (archives)

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Argentina to reassign 600MHz spectrum for mobile use by mid-2018

August 29th, 2016, by

Argentina has one of the more advanced telecom infrastructures in Latin America, though much investment is still required to update services in rural areas. To this end the government has embarked on a large-scale National Broadband Plan. In August 2016 the state-owned infrastructure operator ARSAT launched a ARS4.53 billion project to extend broadband services to some 1,200 rural communities. Economic and political difficulties during the last decade have impacted on sector investments, and while the economy outlook into 2017 remains uncertain the devaluation of the peso against the US dollar continues to impact on operator revenue, and thus on investment plans.

Although there are numerous operators licensed to provide services, there is insufficient competition in the broadband sector, and the provision of both broadband and mobile services is dominated by a few key players. Spain’s Telefónica/Movistar and Telecom Argentina, which was recently sold by Telecom Italia, are the largest telcos, followed by América Móvil’s Claro/Telmex. The pay-TV sector is dominated by Grupo Clarín, which also has an interest in the broadband segment as well as the mobile market following its January 2016 acquisition of Nextel Argentina.

The country has one of the most dynamic mobile markets in the region, being the third largest after Brazil and Mexico. Mobile penetration was about 143% by mid-2016, with a slight fall in the number of subscribers year-on-year following a long period of steady annual growth. Three mobile companies closely compete in the market, with Claro marginally the market leader. Grupo Clarin has now entered the market via Nextel Argentina, and though Nextel only has about 7% market share Grupo Clarin is able to add mobile services to its broadband and cable TVs offerings. By the end of 2016 the conglomerate is also expected to have launched ITPV/VoD services. The MVNO is gaining in strength, with Virgin Mobile becoming one of the more recent licensed players. Resolution 38/2016 has in addition introduced regulations aimed at facilitating the entry of smaller MVNOs and so encouraging market competition.

Significant improvements to the reliability of mobile networks are anticipated during the next few years following the auction of spectrum in the 700MHz and 1700-2100MHz bands, while by mid-2018 operators will also be able to make use of spectrum in the 600MHz band which will be reassigned from pay-TV providers.

The broadband market suffers from limited competition. The two fixed-line incumbents Telefónica Argentina and Telecom Argentina dominate the DSL platform, with the only meaningful competition coming from the cable modem platform, itself dominated by Grupo Clarín’s Cablevisión unit. The five-year national connectivity plan, dubbed ‘Argentina Conectada’, is being managed by the state-owned satellite company ARSAT, which also recently became involved in a ARS4.53 billion project to deliver low-cost broadband to 1,200 rural localities across the country.

This report provides an overview of Argentina’s telecom market and regulatory environment. It also reviews the broadband and pay TV markets, accompanied by relevant statistics, analyses, and broadband scenario forecasts to 2021. In addition the report assesses the mobile market, providing profiles of the mobile operators, a review of the growing MVNO sector and subscriber forecasts to 2021.

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

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Nigerian regulator hoping telecoms accounts for up to 25% of GDP by 2025

August 26th, 2016, by

Nigeria has one of the largest telecom markets in Africa, supported by the second largest economy on the continent after South Africa. Given the potential for further growth, the sector attracts considerable foreign investment. Far reaching liberalisation in recent years has led to hundreds of companies, many of them small and localised, providing varied telecom and value-added services in an effectively regulated market.

The mobile sector has benefited from market competition and the wider deployment of LTE services during the last two years, which has supported operator revenue and encouraged the adoption of mobile broadband among subscribers. Other than the key mobile network operators, there are a number of additional players operating under a unified licensing regime.

After a decade of failed privatisation attempts, the incumbent national telco Nitel and its mobile arm M-Tel went into liquidation, with the NATCOM Consortium acquiring the telco in March 2015 for some $252 million.

Nigeria has the most competitive fixed-line market in Africa, featuring a second national operator (Globacom) and over 80 other companies licensed to provide fixed-telephony services. The alternative carriers combined now provide around 85% of all fixed connections while the ailing incumbent.

Several microwave and fibre-based national backbone networks are being rolled out by various companies. Nitel’s monopoly on international fibre bandwidth via the SAT-3/WASC submarine cable system ended in 2009 when Globacom’s Glo-1 cable landed in the country. Additional submarine cables which have landed subsequently, supported by improved domestic fibre infrastructure, have delivered a further boost to the country’s developing broadband sector by improving bandwidth and reducing prices for end-users.

The broadband sector has seen considerable consolidation among players, from over 400 ISPs in 2012 to around 90 by mid-2016. Most internet connections are via mobile networks, principally GSM and 3G and more recently LTE, though there are a number of WiMAX operators which have found niche markets.

Supported by the expansion of national fibre backbone networks, platforms such as e-commerce, online banking and e-payments, e-health, e-learning and e-government are evolving rapidly. The government has continued with its plan to increase broadband penetration to 36% by 2018 and to enable over 80% of the population to be able to receive mobile broadband via 3G and LTE technologies.

Nigeria has Africa’s largest mobile market, with about 150 million subscribers and a penetration rate of 107%. The rapid growth in the number of subscribers led to problems with network congestion and quality of service, prompting the telecom regulator to impose fines and sanctions on the network operators. These operators have responded by investing billions of dollars in base stations and fibre optic transmission infrastructure to support the ever increasing demand for bandwidth.

Efforts are also being made to encourage network sharing and to outsource the management of tower infrastructure to third parties. There remains considerable growth potential in rural areas where the provision of network infrastructure and operations is expensive, and consequently where mobile penetration is lower. Competition of voice pricing has encouraged operators to develop new revenue streams from mobile broadband and data services, including m-payments and m-banking.

Although the market is one of the most competitive in Africa, the industry regulator between 2013 and early 2016 applied a price floor on voice and data tariffs in a bid to prevent the dominant operators from squeezing competitors. Following years of delay, Mobile Number Portability (MNP) was finally introduced in 2013, and this has stimulated market competitiveness. The terrorist group Boko Haram has created difficulties for network provision and maintenance in the northern states, a difficulty which neither the government nor operators are properly positioned to address.

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

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NBN making progress but dark clouds ahead

August 25th, 2016, by

By late 2016 – seven years after the launch of the NBN – over two million premises were able to connect to the NBN. So far three-quarters have access to FttH (fibre to the home), the remainder to wireless and satellite networks. The revised rollout of the so-called MTM (multi-technology mix) based on FttN and HFC) only began in earnest in 2016. The NBN company has now fine-tuned its rollout strategy and is set to extend the network by 40,000 premises a week; but from here on FttH will play only a minor role, mainly in greenfield installations.

After the Coalition government won the 2016 federal election any debate about changes to the underlying infrastructure faded away, as the rollout of the MTM is now too far advanced. However the NBN company has indicated that it does have a roadmap towards providing fibre deeper into the residential network. Fttdp (fibre to the distribution point) is one of the key technologies they are investigating.

Around the same time the industry started to seriously question the regulatory environment around the NBN. The smaller players are in danger of being squeezed out of the market through complex and expensive NBN wholesale offerings. These same arrangements also mean that the end-users are not receiving the benefits of high-speed broadband in an affordable form. The ACCC reacted to this by launching a fresh competition study, the results of which will become available in 2017.

As a result of unattractive wholesale arrangements and a second-rate NBN several telcos are eager to skip the MTM-based infrastructure and deploy their own fibre networks. In this way competition is arriving in multi-dwelling units (MDUs) in various cities, this despite the fact that competition is heavily restricted through government regulations. Advances in wireless technology – especially in comparison with what a second-rate NBN can deliver – has seen an explosion in new players entering this market. Furthermore future developments in mobile technologies (LTE and 5G) will lead to more competition with the NBN, as more and more users will opt for better and more affordable high-speed broadband services through these alternative services.

All of these developments are putting a cloud over the financial future of the NBN company. Government funding runs out in 2017, and with another $20 billion likely to be needed to finish the job it is questionable whether private investors will be interested in funding this shortfall.

Apart from another two-year delay in the roll-out of the NBN – due to the political changes to the NBN since 2013 and a more than doubling of the costs – significant uncertainties still remain about some of the technical and operational issues of the MTM. There are a great number of unknowns in this process and overseas FttN (fibre to the node) experience shows that it is not all plain sailing. In many cases large-scale replacement of old copper infrastructure will be required. At the same time rolling out fibre has become significantly cheaper, especially when done by new companies, as is the case in the USA, France, the Netherlands and a number of other players in Northern and Eastern Europe. Most countries now skip their FttN and HFC rollouts and go straight into FttH.

While in mid-2015 the government revived some of the digital economy strategies that were put in place between 2009 and 2013, there is still no holistic approach to services such as e-health and e-education. Interestingly we see cities developing their own strategies around the concept of smart cities. When the government announced its innovation policy it did not even mention the important role the NBN can play in that context. Cities, however, do understand the importance of such infrastructure for their economic and social developments.

These broader developments in the digital, sharing and interconnected economy will be further accelerated by a range of other industry sectors such as cloud computing, M2M and big data. The over-the-top (OTT) players are also becoming increasingly prominent in the telecoms industry and this will start to blur some of the borders between infrastructure, IT and applications.

The NBN will have to become the predominant national digital infrastructure for all of these developments, as a utilities-based network it will also need to provide its services to those other sectors. With these sectors involved we will see the industry developing specific new business models around infrastructure, ICT and retail. Streaming video and other media and entertainment applications are already playing an important role in the drive for high-speed broadband demand. The question here is whether the current MTM configuration of the NBN will be able to deliver the capacity, reliability, redundancy and security for such services in a ubiquitous way to all Australians. Most experts agree that only a full-fibre network can deliver that level of infrastructure robustness.

The report covers detailed information on the rollout of FttH, FttB, FttN, Fttdp, HFC, wireless and satellite infrastructure, as well as statistics on subscribers, revenues and a range of other parameters. It also provides a range of analyses and insights, plus an overview of the policies and regulations that apply to the NBN and the effect that these have on competition in the telecommunications wholesale and retail markets.

For detailed information, table of contents and pricing see: Australia – The National Broadband Network – Moving into 2017

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