BuddeBlog

At ATUG 1998 Paul Budde Communication was represented by associate, Sue Grant. Together with Sue we have analysed this important Australian event and have compiled the following report. The focus, of course, was on the opening session of the conference, starring:-

· Douglas Campbell – Group Managing Director Carrier Services Telstra.

· Chris Anderson – CEO Optus.

· Steve Liddell – President WorldCom (SE Asia)

· Larry Williams – CEO AAPT

All speakers (except for Telstra) seem to be of the same opinion – the industry is spending too much time in court instead of getting on with the job of open competition. Chris Anderson gave an impressive talk with the clear message – let’s get out of the courtroom and on with open competition, openly criticising Telstra for its anti-competitive behaviour; AAPT and WorldCom whole-heartedly agreed with him. Larry Williams ‘joked’ that they had no interconnect agreements with Optus — they had papers on the table with Telstra but Optus had not offered anything yet. Optus elaborated on the fact they had accepted a deal with Telstra (rather reluctantly) about local calls being 19-22cts. Telstra again emphasised its willingness to co-operate with the industry, but notably absent here was the company’s CEO Frank Blount. A year ago it was the boss himself who gave exactly the same message. You might recall my critical response to his speech in my ‘Read my lips’ editorial. Mr Blount was angry about that and we published his response in the following issue of our newsletter. However, my criticism/ cynicism has proved to have been warranted and it did not go unnoticed at the conference that not much of Frank Blount’s promises at ATUG 97 had been kept. Doug Cambell’s speech not only followed Frank Blount’s speech from 1997, but also David Stokes McKeon’s presentation at SPAN 96, and similar promises of wholesale services for SPs by other Telstra managers such as David Rolls, Martin Turner and David King over the proceeding years – all of these promises well documented in our newsletters and reports.

Richard Alston, Minister for Communications, indicated that his government is willing to amend the current legislation if he has proof that there is a need for this. He stated at ATUG that he didn’t have this proof. Telstra totally agreed with this but all the other parties argued during the conference for changes to the Act. However, it will be very hard for the Minister to continue to resist legislative changes as the ACCC and others maintain that it is clear that the current self-regulatory approach is not delivering the competitive changes foreshadowed by the Minister in the 1996 Telecommunications Act (see also next article).

On the 17th of June I will launch our new Asia Telecommunications Report in Hong Kong. We are publishing the Report for the third time and from its humble beginnings in 1995 it has grown to three volumes. This is the first time that we are actually launching the Report in Asia and I am pretty excited about that. Current subscribers to the Report will have a very special deal. They get all three volumes for the price of one. New subscribers also get a good deal for the three volumes $750 instead of $975 (excl. postage for overseas subscribers)

Please let us know if we should reserve a copy for you. If so, it will be sent out on the day it is published.

We work with over 30 experts in telecommunications in over a dozen countries, straddling all five continents. All our experts are among the best in their fields and include market researchers, journalists and consultants. They provide information, directly update reports through our Internet/e-mail service and provide advice to us or our customers.

Our service is aimed at business users in the telecommunications, broadcasting and media markets. Customers are provided with up-to-date information in our Web Reports, and value is added through our well-known analysis of global and local developments. Our 2,500-plus customer base (in over 60 countries) includes:-

· Telecommunications operators and service providers;

· Financial institutions such as banks, stockbrokers, investors and trading companies;

· Regulatory and other government authorities;

· Telecommunications suppliers and manufacturers;

· Publishers, broadcasters and other media companies interested in content and service provision;

· End-users who are looking at telecommunications as a strategic business tool to enter new electronic markets or who want to develop new electronic products.

We provide close to 1,500 Web Reports. They typically vary between 5 and 10 pages of information. Our home page receives around 30,000 hits a month from a highly targetted business audience. The experts network was started by four of us in Washington DC in 1983, but it has been the Internet that has made it even more valuable. Our experts involved in the network have an integral knowledge of the specific markets they assist us in. We tap into their knowledge and contacts to enable us to update country, company or marketing reports.

Through their contributions they become a member of our ‘virtual’ consultancy network. We promote their knowledge and expertise to our customers as a member of our global network of independent telecommunications experts. This is done through our Web service and, where appropriate, via e-mails.

Customer enquiries regarding assistance, consultancy requirements etc. are, if appropriate, passed directly on to the relevant people in our network. We will develop our ‘virtual’ consultancy service further as it evolves. Suggestions and ideas are more than welcome.

AT&T plans to crack down on calls from ‘occasional callers’, or customers who make fewer than three long-distance calls per month. According to market research, many of these callers live on moderate incomes, and a large percentage are senior citizens.

In a savage market the competition, in this case led by Bell Atlantic, were not long in coming up with some sad stories. For instance, they cited a recent report in The Record of Hackensack, about an 85-year-old woman who has been a loyal AT&T customer for years. The story said that she, and 20 million other AT&T customers like her, might be forced to pay more for their long-distance calls or to pay for long-distance service in advance.

Despite the current currency crisis in Asia and its threat to the region’s economic prospects, total cellular and PCS subscribing in South East Asia will grow from over 7.4 mill. (1997) to over 21.6 mill. (2002). This forecast was made in Wireless Markets and Strategies in SE Asia, a market research study by Pyramid Research. The Philippines and Indonesia, boosted by the issuance of new operator licences, will be the fastest growing markets in percentage terms, according to the report, while Vietnam, with its low penetration rate and small subscriber base, will experience the region’s highest percentage growth rates. Wireless service revenues for the region are expected to grow from over $4.2 bill. (1997) to over $10.3 bill. (2002).

Wireless markets across South East Asia are experiencing strong growth. While the currency crisis and political turmoil may delay the privatisation of Vietnam’s Posts & Telecommunications and CAT and TOT in Thailand, privatisation of major state-owned telecommunications operators in the region is expected to be mostly completed by 1998, making room for new players and increased competition.

Although the currency crisis threatens to substantially reduce the average monthly usage revenues per subscriber, the dampening effects of the economic situation will be offset by the likely emergence of new market players in Indonesia, the Philippines, Thailand, Singapore and Vietnam between 1998 and 2002. The entrance of these new players will result in lower prices, better service quality, and intensified competition – all serving to spur additional growth. With intensified competition in cellular markets in SE Asia, incumbent operators will face pressures to maintain current price levels and place greater emphasis on operational efficiency and network optimisation, which will also contribute to market growth.

One market in particular that is expected to experience remarkable growth is Wireless Local Loop (WLL). WLL subscribership is expected to climb from 1 mill. subscribers in 1997 to over 5.3 mill. subscribers in 2002. The key markets for WLL expansion will include Indonesia, Philippines and Vietnam. In the Philippines, the race to meet main line deployment obligations by 1998 is expected to give a boost to WLL equipment procurement. And in Indonesia and Vietnam, low main line penetrations and rapid build-out of infrastructure will continue to give a boost to WLL equipment market growth. The WLL market also looks promising in Singapore, where a second basic services operator is being tendered. The likelihood of WLL equipment deployment is strengthened given the build-out time frame stipulated in the tender.

Although growth in the paging market will not be as substantial as that of WLL, it will remain steady, with an increase in subscribership from around 4.7 mill. (1997) to nearly 9 mill. (2002) (av. growth rate-14%). Overall, paging markets in SE Asia are characterised by high levels of fragmentation and intense competition. In Malaysia, the paging market is at a crossroads. Paging tariffs are not competitive with local cellular and PCS tariffs. According to the research study, competing with cellular, PCS and CAS services will continue to place pressures on the paging market; paging companies must begin developing niche markets, such as information services and message handling in order to gain a clear market position and strengthen growth prospects in the medium term.