BuddeBlog

A very interesting presentation from Hutchison‘s Barry Roberts-Thomson at the ATUG conference (Now99) last month foreshadowed untimed local calls on the company’s Wireless Local Loop (WLL) service to be launched over its new CDMA system in 2000. This is an excellent move, welcomed by everybody in the industry who would like to see some tangible results of the promised competition. Another interesting detail here is that Hutchison will be able to use numbers that look like landlines – these will not incur the extra fixed-to-mobile call rates.

As you might recall from previous articles, I am a great believer in WLL services, despite their slow start in the market.

Barry also explained some of the strategies that the company will employ. First of all there is the new name ‘Orange’ – this becomes a global brand. As the company’s mobile services in Europe and Asia are already using the name it makes a lot of sense in our rapidly globalising environment.

However, I am not so sure about the company’s assessment that it will be able to keep the CDMA-WLL system separate from the national GSM systems and therefore avoid cannibalisation. They maintain they do not want to rock the boat but I interpret this as an effort to avoid being seen by companies such as Optus and Telstra as major competitors to their national mobile services.

Hutchison has indicated that it is aiming at the second or third line market – an interesting thought, but I am doubtful if this will be the reality when the service is finally launched in 2000. In my opinion a head-on clash will be unavoidable. Competition will drive the various segments into one, and if Hutchison is not going to do it others will – offering seamless services between WLL and national services; bundling the various offerings in nice packages.

The name of the game is the call charge that the customer will have to pay and, with half a dozen players in the market within the next 12-18 months, I find it hard to believe that companies will be able to keep the various services sheltered from each other (and thus charge higher prices).

One advantage that Hutchison has, however, is the architecture of their CDMA network. This is much more suitable for the local loop market than GSM based networks.

The companies who can deliver, with the best price and the most attractive package, will be able to survive in this market. We can already see this happening in markets that operate services like this in the USA, Europe and parts of Asia. BT, for example, launched the world’s first cordless/GSM service based on the world’s first integrated WLL/GSM handset. BT uses the DECT technology for its WLL service, as opposed to the CDMA one employed by Hutchison and others in Australia.

Called Onephone, the service operates as a standard cordless phone when in range of the base station, and as a GSM phone when out of range. The system, comprising a WLL/GSM handset, WLL only handset and integrated charger/base station, sells for £399. Usage also requires a subscription to Cellnet (£20 per month) and a Flexinumber contract (£2.95 per month).

Another strategy indicated by Barry was to address the market of multiple occupants, such as students and other young people sharing apartments, etc. This certainly makes sense, especially with the untimed local call service. With the right data speed the service would also become very attractive for Internet/laptop services.

I received a lot of reaction to my article Regional Telecommunications in Australia which was published in our April Telecommunications newsletter (p51).

In general terms the reaction from remote and rural Australia has been along the following lines:

- ‘Finally somebody is talking about our needs, rather than Canberra’s political needs.’

- ‘The process is politically motivated and politically driven and doesn’t address our real problems.’

- ‘The government’s approach is piecemeal not structural.’

- ‘Over 80% of RTIF (Regional Telecommunications Infrastructure Fund) projects will not be around in a few years from now’.

- ‘Rather than being helpful the State/Territory has added another politically motivated level to the process.’

– and so the list goes on.

This prompted me to update the article with my latest findings and again make it available to you in the hope that it will reach those people who can influence the government to change its short-term politically motivated regional process into an economically sustainable long-term policy.

I particularly believe that our equipment suppliers should play a key role here. They have a lot to gain from new regional investments in telecommunications projects. They can help in two ways:

- first of all, through their national and regional state contacts; and

- secondly, by looking at grassroots initiatives from local councils, local ISP and local cable TV/information highway projects initiated by regional development boards and others.

By providing these groups with expertise and access to, for example, internal financial and business experts within the suppliers industry together they could build a far more sustainable information highway infrastructure than through the political process of piecemeal handouts.

Below is a brief update of the article, the original of which is available in Web Report: Australia – Regional Infrastructure Developments:

Despite its enormous size, Australia is one of the only countries in the world that doesn’t have regional telecommunications infrastructure. Throughout the rest of the world local governments, regional economic development authorities, regional power companies and regional businesses have far more input into regional developments than is the case in Australia.

Projects in outback and rural areas need to be looked at from a long-term standpoint. People working in these areas find it rather bizarre that people in Canberra address these issues in an environment where the bureaucrats who administer the programs move assignments every ten months or so. And then it goes to State/Territory officials, often adding another level of frustration to the project.

This has led to an under-servicing of regional markets. Traditionally this has been the domain of Telstra, and, particularly in its previous incarnation as Telecom Australia and the PMG Department, it has served Australia well. However, under a more commercial regime Telstra, being a very large and bureaucratic organisation, is no longer able to service smaller regional markets in an innovative and niche market way beyond the POTS (plain old telephone system).

Reports from remote Australia indicate that people there are ‘crying out’ for service. Often even a phone connection in these areas is a big plus. At the same time it is clear that Telstra has invested large sums of money here and wants to keep things as much as possible the way they are.

Rather than providing a blueprint strategy on how it envisages the development of regional telecommunications, the government operates in a haphazard way, providing small, welfare-based subsidies to those who know how to use the political system through lobbying and political manipulation. An example of this is the way the Regional Telecommunications Infrastructure Fund is handled. Rather than using the Fund to stimulate the development of regional infrastructure, small subsidies were provided without any larger plan being in place. Before money is allocated for regional projects the government should develop a regional strategy which should be supported by regulatory changes. The government’s current method of dealing with the issue will result in a waste of well over 50% of allocated funds, with no prospect of long-term success.

People are starting to realise that this indeed is a piecemeal approach and they are starting to realise that what they have funded aren’t going to be around in year or so when the recurrent costs come back to haunt them. Also the small size of some of the projects makes them economically unsustainable for the long term. The trouble is that some of these projects proved the ‘need’ for their funding without anyone really thinking through if the project was sustainable after the communications infrastructure had been built.

Forrester Research estimates that business-to-business (B2B) Web commerce will grow from US$138 billion in 1999 to US$541 billion in 2003.

Technologies such as enterprise resource planning have been promised by computer companies for years, and now the Internet is making them a reality.

Extranets will probably be the biggest B2B opportunity, with large companies using them to automate many arduous tasks that are currently done manually.

The electronic buying and selling of office supplies, maintenance items, and services is becoming increasingly popular among both buyers and vendors because it is more efficient and cost-effective.

Another major B2B market is Web-based logistics systems that more efficiently control the scheduling, transportation, production, and distribution of products between international companies.

Amazon.com is a good example of a firm that is in the lead in this type of business.

You might recall that last year I reported on the Europe IT initiative for community-based IT projects. Its manager, Ulla Skiden (Stockholm), asked me to help promote the activity in Australia. I therefore take pride in reporting that four Australian projects have reached the finals.

· Australian Museums On Line, a Web site linking all Australia’s museums and cultural bodies, in the Culture and Media category.

· the year 2000 Resource Asset Management Program from Sydney in the ‘IT for Small-Medium Enterprises’ category

· the I*EARN First Peoples project from Bairnsdale Victoria in the IT ‘All Forms of Education’ category

· Skills.net from Melbourne in the ‘Equal Access to Networking’ category.

These projects are all in the group of ten finalists in their category for the Global Bangermann Challenge, following a two-year search by the City of Stockholm for the world’s finest IT projects with a social focus.

Global Bangemann Challenge Web site: www.challenge.stockholm.sc

SkyCache is building and operating a global satellite broadcast overlay network for the Internet to improve the movement of World Wide Web content, Usenet News, digital audio/video, FTP mirroring, and Web site replication, among other uses. The service now has customers from Beirut, Lebanon to Lebanon and the USA.

It enables ISPs and corporations to leverage existing bandwidth through cache turbocharging and a full Usenet News feed via satellite broadcast. Service is delivered via GE Americom’s GE-3 in North America and GE-1E (Sirius II) over Europe.

Future releases of the SkyCache service will support data replication and streaming media distribution.