BuddeBlog

FOCUS ON CRM

Over the last few weeks we have seen some very encouraging signs regarding the development of broadband in Australia (Optus) and in Singapore (SingTel and StarHub/SCV). So, while visiting CommunicAsia in Singapore last week, I spoke to both SingTel and StarHub to get a complete update. Full marks to both companies, but especially to SingTel, for providing me with answers to all my questions. They bent over backwards to help me.

Speaking in both Hong Kong and Singapore on Customer Relations Management (CRM), I proposed that CRM (of which the concept constitutes 85% and the actually technology makes up the rest) could propel Asian companies and Asian people into a leading role in this development. During this trip I was involved with the major company in the field, Siebel, and I learned quite a lot about CRM and some of the great new applications that are becoming available (such as eAdviser – but more on that next month).

IBM calls itself the largest user of CRM and it is very impressive to see what IBM has been able to do with it within a small period of time. For those people who consider CRM to be a load of hype, I would say ‘think again’. I am convinced it is the lifeblood of an organisation. The many failures in the implementation of CRM is a fair indication that those who concentrate their efforts on the 15% of CRM that represents the technology, still don’t have a good understanding of what is really involved in customer services. Technology is important, certainly, but it should be attended to only after the company has fully embraced the concept of customer services. These are still dirty words in the telco industry – lots of lip service, but I can’t bring to mind any telco in the world that has a good customer service (in terms of customer expectations). I refer to my earlier analysis – see Report www.budde.com.au: Global – Industry – Strategies – High-level Strategic Thinking

COMMUNICASIA

Before going on, I must once more express my absolute disappointment at the lack of Australian participation at CommunicAsia. NDC was the only visible Australian company and they did a great job. They told me that they have further strengthened a number of good relationships in Asia. I am sure there were a few other Australian companies present, but I didn’t see them. I didn’t see Telstra, PCCW or any of their new ventures such as Reach and WirelessCo. One comment was ‘Australia should try to be part of Asia and blend in rather than wave an Australia flag (hmm) don’t know.

New Zealand was very well represented, with a range of companies, and so were many other countries such as Spain, Germany, USA, Korea, Thailand, India, Taiwan, to name just a few. Paul Budde Communication was represented by one of our report resellers, GII from Japan. We successfully launched our five Reports on the Asia telecommunications and information highway markets (see page 100 and backsheet for more information).

THREE MAJOR BROADBAND DEVELOPMENTS

But back to SingTel and StarHub .

A few weeks ago telco StarHub and cable TV operator Singapore Cable Vision (SCV) launched their plans to merge their activities and upgrade their networks and services to a fully-fledged broadband network. SCV already has close to 300,000 cable modems in use. The merged entity will upgrade the analogue network to a digital one – it hopes to complete this over the next few years.

Hot on their heels was the announcement from SingTel. Some 300 residents in Singapore will be involved in an interactive multi-media services trial when this company rolls out its Interactive Television (iTV) later on this year. SingTel will use its broadband ADSL (Asymmetric Digital Subscriber Line) infrastructure.

The company has already signed up various content partners, such as Columbia-Tristar, Sesameworkshop, Intertainer Asia and MediaCorp, to provide movies, sports, drama, travel, and news content. However, it doesn’t have a broadcasting licence so it will be interesting to see how the regulatory issues are resolved.

The initial service offerings available during the trial period are video on-demand, scheduled program channels, electronic program guide, Internet access, e-mail, TV commerce/home shopping and information services. Additional services such as enhanced TV, interactive gaming and interactive advertising will be made available at a later stage in the trial.

Within the same few days, Optus announced that technical testing of its two-way interactive digital television platform on their broadband network was progressing well, with technical suppliers and more than 35 content partners. Trial participants are receiving a wide range of features via their existing televisions including TV Net, TV Mail, Optus Television content and a fully interactive electronic program guide. Pace Micro Technology have supplied high-speed DOCSIS-compliant digital cable set-top boxes and Liberate Technologies have supplied the middleware for the trial.

ANALYSIS OF ITV

Interactive TV has so far been spectacularly unsuccessful all around the world. It has been available in various formats since the late 1970s (first trials were in Columbus, Ohio, Osaka, Japan and Berlin, Germany). But, notwithstanding the availability of the technology, the business models to make such a service profitable have so far proved elusive.

The other problem in the iTV industry is that as yet there are no international standards. However, the Open TV platform that will be used by SingTel has a good chance of becoming a global standard. Furthermore, they have a good migration path to other developments such as Multimedia Home Platform (MHP) (also see article on page 97), the next generation of interactive TV based on Java technology (see web report on www.budde.com.au: Global – Broadcasting – Digital Terrestrial TV). MHP has already been selected by the Singaporean Broadcasting Authority as the official iTV standard for the country.

My analysis of iTV is that it will only be successful if included in a total broadband package. On its own we know that iTV is not all that attractive to customers – they don’t want to pay lots of money for the feature. However, if it were to be embedded in e-entertainment, VOD, and other ‘Internet-a-like’ applications, iTV could become a very important ingredient. Those companies that are capable of harnessing the various technologies (including videostreaming and datacasting), enabling them to base their offerings on what customers want, rather than on what they would like to push, are going to be the winners in this new field (see my remarks on customer services above).

Unfortunately, however, both SingTel and Optus are delivering the same old iTV examples: watching a sports match on television, fans will also be able to check the players’ profiles, visit the Internet website of the teams, purchase online team merchandise, and order the same boring old a pizza or meal, using just a remote control (yawn).

But, having said this, the main point is that broadband is now well and truly back on the agenda. SCV and Optus have both been leaders in this field since the mid-1990s, but both failed to capitalise on their early start. For a while it was thought that SingTel was not really interested in broadband. The company is in the process of buying Optus and they did give consideration to selling off that company’s broadband operations. However, it now looks as though significant strategic progress has been made within these organisations. I am sure that the rest will fall into place as long as they stick to their long-term strategy. We still have a lot to learn about broadband and it is great to know that SingTel, StarHub/SCV and Optus are taking these major initiatives.

More from CommunicAsia (3G, SMS and telco developments in China) in next month’s Telecommunications Newsletter.

Paul Budde

Regional Australia is the biggest loser from legislation to limit competition in the digital television spectrum. It allows the three commercial broadcasters to retain control of what you watch on TV to 2008. New players are prevented from delivering cheap Internet services to home television sets. The impact on regional Australians still grappling with poor bandwidth on the copper wire network is severe. You have been denied a second Internet platform and access to the information and knowledge economy.

What is this deal, how was it done and why were our rural lobby groups so quiet about it? In this article we assess the true impact of data-casting legislation on regional Australia.

By Claire Braund

People living in regional Australia will miss out on cheap unlimited Internet access through their television sets under new Government legislation. The Broadcasting Services Amendment (Digital Television and Data-casting) Bill prevents data-casting, the delivery of Internet through home television sets, in the digital part of the spectrum. The legislation passed through Parliament in June with the support of Labor and the Democrats.

Digital television is a cheap, effective way of delivering Internet services to country areas suffering from bandwidth problems and lack of competition to Telstra. Using digital technology, information to display the picture and play the sounds is compressed into smaller packages that do not require as much capacity to transmit. This opens up the possibility of sending four channels out where one currently exists. Many in the industry believe that this would have created a second, vital Internet platform for regional Australia.

Instead of being opened up to competition the spectrum will now be used by the existing free-to-air operators, Channels Seven, Nine and Ten, the ABC and SBS, to transmit analogue television and 20 hours per week of High Definition Television (HDTV) until 2008.

HDTV was mandated in 1998 in a deal between the Government and Kerry Packer. While it delivers an excellent picture to those with the thousands of dollars to buy the necessary equipment, HDTV is a bandwidth hungry white elephant that has been used as a convenient excuse to support a monopoly on broadcast licences. This cost to the taxpayer of allowing the existing TV networks to keep control of the 21MHz of digital spectrum is approximately $3billion.

People living in regional Australia, who do not have access to high-speed Internet connections, are largely tied to the Government owned Telstra. Increased competition would have given Australian consumers access to affordable high-speed, interactive information and entertainment products. Data-casters would have been able to stream audio and video through a data-casting service over the broadcasting bands. In layman’s terms we would have been able to get the Internet on our televisions. It follows that this would have led to packages of free-to-air TV, multi-channelling, pay TV and Internet services to be offered to regional customers by competing telecommunications providers for a monthly fee. It was feasible that subscribers to this service would have been provided with a set-top box or a new digital television, in order to ‘buy’ their loyalty.

What the players say:

The legislation has been heavily criticised by media, Internet and consumer groups as protective, backward and harmful to the development of digital technology in Australia.

Telecommunications Consultant, Paul Budde, said digital television is more important to people living in regional areas as they do not have access to options available to urban consumers, such as cable TV. Mr Budde also points out that the digital part of the spectrum is the only area where the Government is regulating technology. In the wireless, cable and satellite parts of the spectrum, the Government regulates content rather than technology. Video and audio can be streamed over all of these other networks. This is creating an artificial distinction between access technologies. For example broadcasting technologies can’t be used to access the Internet, but telecommunications, cable TV and satellite networks can.

The Australian Consumers Association CHOICE, believes that the legislation is likely to stifle potential technological opportunities for Australian consumers. Potential data-casters, News Ltd and Fairfax maintain that in regulating the digital spectrum the Government is preventing people living in regional areas and low income earners from receiving the Internet through a set-top box on their television. (50% of the Australian population do not have a PC and a large proportion of them will never have one. Almost all of them however, have a TV.)

News Ltd has said that "If they’re not stopped Alston’s ‘datacasting’ laws will widen the divide between the information-rich in the city with their high speed cables and the information-poor in the regions with no viable bandwidth options."

The Government’s own Productivity Commission basically advised against all of the elements that the government has legislated. For close to a year the Commission received submissions from across Australia, but none of the recommendations from this very broad-based inquiry have been implemented.

Rural lobby groups, such as the National Farmers Federation, the state farm bodies and local government, have been virtually silent on the legislation.

Reasons for this could include:

- A lack of understanding of what is a highly complex issue;

- The timing of the legislation (it was brought in just before the GST); and

- Lack of cooperation and coordination with Internet groups and data-casters.

Another reason may be an unwillingness to upset a Government that has been and is keen to continue, throwing money at rural and regional Australia. With funds such as Networking the Nation ($400m), Advancing Australia ($525m), the Natural Heritage Trust ($1.5bil) and others, the perception may be that this is worth more to regional Australia than opening up the $3bil digital TV spectrum. Frustrated Internet users in regional Australia may not agree.

Jon Peddie Associates predict that by 2007 the number of digital set-top boxes installed worldwide will reach 397.5 million.

Last year 91.5 digital set-top boxes were installed world-wide and this figure is predicted to reach 127.4 by the end of this year.

The total is expected to reach 178.7 million in 2002, increasing to 229.9 million in 2003, and reach 282.2 million in 2004.

By 2005, 326.7 million digital set-top boxes will have been installed globally and a total of 364.7 million is expected by 2006.

The predictions cover cable and satellite subscriber boxes, games consoles, DVD video players, Internet television, entertainment PCs, and PVRs.

In October 2001 National Telecoms Group acquired telephony integration company Recom Corporate Communications. Under the deal, NTG will extend voice and data services to all Recom clients which are predominantly in the business space and Recom will extend its specialist integration telephony services to the NTG client base. Recom, has been operational for 14 years in the Australian market.

TelstraSaturn has formally ruled itself out of any link-up with CLEAR Communications.

There has been recent analysis suggesting that New Zealand is only big enough for two telecommunications carriers – Telecom NZ and AN Other.

See Web Reports: New Zealand – Company Profile TelstraSaturn