Archive for September, 2003


Monday, September 1st, 2003

FastWeb ( is the leading alternative broadband telecom operator in Italy. The company provides its business and residential clients in the main Italian cities (Milan, Rome, Genoa, Turin, Naples, Bologna and Reggio Emilia) innovative telecommunications services over optical fibre and ADSL, providing an integrated system for the simultaneous use of telephony, high-speed Internet (up to 10M/bs for optical fibre and up to 4Mb/s for ADSL) and video.

During the first half of 2003, FastWeb’s revenues stood at Euro 183,1 million, approximately double those of the first half of 2002. In the first half the Ebitda (earnings before interest, tax, depreciation and amortization) stood at Euro 40,1 million, a significant increase with respect to the Euro -5,5 million of the same period of the previous year.

At the end of June, FastWeb had over 249,000 clients, almost two and a half times those of the same period of 2002 (103,900). FastWeb is owned by e.Biscom SpA, listed at the Milan Stock Exchange (Nuovo Mercato) since March 2000.

Digital terrestrial and satellite channels were added in August 2003, based on technology supplied by Alvcatel. New TV services include: RAI, Mediaset, La7, BBC World, Bloomberg, CNN, Cartoon Network, RAINews 24 and RAISport, together with Video-on-Demand service, with 3,500 titles. Moreover, thanks to the conditions imposed by the European Antitrust Commission, FastWeb TV offers the live broadcast of all football matches for which Sky Italia hold rights. Therefore, more than 120 live TV channels are now available on optical fiber and ADSL.

See also: Italy – Broadband and E-services.

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Monday, September 1st, 2003

Hot on the heels of the Unwired announcement of the launch of its wireless broadband services into the market at comparable or lower prices as the current Telstra products, its competitor, Personal Broadband Australia (PBBA), announced a ‘vigorous’ campaign to pursue partnerships with major telecommunications carriers Telstra, Optus and Telecom NZ.

Upon analysis, I conclude that PBBA will offer its service to the main players as a counterattack to Unwired. PBBA’s financial investment is considerably less than Unwired’s and, furthermore, Unwired will have a much more aggressive product than PBBA. This will make it very difficult for PBBA to hold its ground – hence its ‘vigorous’ campaign to push their product by getting the big boys on board. If the carriers wished, they could also offer a much more aggressive price than PBBA on its own could offer (eg through bundling). PBBA simply doesn’t have the capacity to seriously start an aggressive broadband campaign on its own.

Forget about all the fantastic ‘extra’ features that are on offer. Broadband access is a matter of price. The ‘extras’ might operate as the icing on the cake, but they are not going to move the majority of the potential customers. Broadband is already a commodity product, before it is even launched, and this is definitely not something that new players like to hear.

I indicated in 2000, when these broadband initiatives were born, that the companies had a 2-3 year window of opportunity to get a head start in the market. For various reasons they have not succeeded in grabbing this opportunity and they now simply have to compete with those who have already entered the market. Unwired seems to have been able to jockey itself into a better position than PBBA – the latter’s iBurst technology might simply be too costly for the market.

It will be very interesting to see if the ‘big’ telcos are willing to use the PBBA opportunity to launch a wireless broadband competition campaign. The need for PBBA to form a strong alliance is further fuelled by the fact that Unwired will be able to offer VoIP as well as broadband. PBBA is a data-only service. Unwired will be able to offer voice at very low cost to its customers and thus make its product even more competitive to the PBBA offering.

There are certainly a few new competition avenues opening up and it will be very interesting to see if the Australian telcos and ISPs use this to lift the broadband profile of the country. With Telstra aiming at a goal of only one million broadband customers by 2005, there are at least another 1.5 million potential customers for grabs. We have been estimating the pent-up demand at 2.5 million, still a conservative estimate by international benchmarks.

Both PBBA and Unwired should be congratulated upon providing the country with new competition opportunities to tap into this market. Let’s grab these with both hands.

Paul Budde

See also:
Australia – Wireless Broadband – Overview and Analyses
Australia – Wireless Broadband Projects
Australia Wireless Broadband in the CAN
Australia – Wireless Broadband Roundtable – Outcomes

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Monday, September 1st, 2003

Paul Budde
In our recently published report on broadband we indicated that, in the end, large-scale residential broadband could only be delivered by large telcos.

The problem doesn’t lie so much in the infrastructure, nor in the wholesale access cost to the incumbent network. It lies in the costs of servicing the customers – the help desk, in particular; technical support, billing and billing disputes, bad debt and so on. Only large-scale operations are able to get these processes streamlined and to amortise the cost of putting the capability in place over a large revenue base. The computing environment for such processes is going to provide plenty of problems in the foreseeable future where end-users will rely on their ISP for help. On top of that, companies have to spend large sums of money on sales and marketing activities.

All of this will need to be done within the parameters of the average revenue per broadband line (about US$30). But, as I have said before, the companies that can find ways to extend their services to facilitate e-commerce-based, permission-based consumer marketing models will be able to significantly improve their business case.

I put together this part of the report after reading about the industry problems of broadband operators in Korea. In that country, over 80% of Internet households use broadband. During the past five years half a dozen companies have been competing for this market, equally divided between cable TV and telecoms infrastructure providers. However, over the last two years Korea Telecom (KT) has put up some stiff competition by delivering superior broadband services over its VDSL network (20-25Mb/s services) at competitive prices. The company has made major inroads into the Korean broadband market.

This is precisely in accordance with the trend that we have predicted for the last five years; after approximately 2 or 3 years of broadband use, the first quarter of all broadband users are ready to move up from the initial 2Mb/s service to services which offer speeds of around 10Mb/s. And, towards the end of this decade, that group will have moved on to services offering around 50Mb/s.

Clearly several of KT’s competitors have been trapped in this race and are now struggling. They don’t have the resources to invest in new infrastructure technologies and they are struggling to service their customer base, which has grown exponentially over the last few years. Without the proper business processes in place, and with limited new net growth, they are running out of steam. Many customers are now churning away to the KT service.

Industry consolidation is now well and truly underway, and during this process it is to be expected that there will be some serious losers.

See also:
South Korea – Broadband Networks and Services;
KT Corporation.

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Monday, September 1st, 2003

Sometimes it’s hard not to say ‘I told you so’. I had one of those moments when I read the information on Sony’s PlayStation2 online gaming activities in Australia.

PlayStation2 is the first mass market device outside of the PC that takes full advantage of broadband capabilities and so represents a real paradigm shift in the home, taking broadband into the lounge room.

This is exactly in line with the principle I have been expounding since the mid-1990s:

‘Develop a broadband market and a range of companies will start creating products for that market’.

I also said that companies like Sony will play a key role here, as broadband will be a huge opportunity market for consumer electronics manufacturers.

A third prediction that is falling into place is that BSPs, unlike their telco predecessors, are going to take a leading role in the distribution chain. I was not too worried about the low margin business of broadband access services. It is up to the BSPs and ISPs to start adding value and that is what’s happening with the Sony project.

And, fourthly, as I have mentioned time and again, this will not be the vertically-integrated market that Telstra has been planning and advocating for such a long time.

The adaptor needed to link the Playstation to the broadband service, together with a network access disk and pre-configured settings, will be distributed by seven ISPs – OzEmail, Telstra, Optus, iPrimus, AOL7, TPG and Hot Key. A copy of the arcade biffo game, Hardware Online Arena, is thrown in as a teaser.

The adaptor will retail for $69.95. Users will also need a memory card that costs around $69.

Sony has spent in excess of $2 million on Network Entertainment infrastructure alone. According to Inform figures supplied by Sony, 868,744 PlayStation2 consoles have been sold in Australia so far this year.

Paul Budde

See also:
Australia – Broadband – Content
Global – Services – Residential Content and Services
Australia – Broadband Retailers
Australia – Broadband – Developments and Analysis 2003

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Monday, September 1st, 2003

As you may already know from my ‘broadbanding of local communities’ campaign, Armidale is one of the leading broadband cities in Australia –I am currently involved in looking for infrastructure opportunities to push broadband deeper into this regional centre in NSW. The city was recently involved in a unique musical broadband event. It will come as no surprise that Perth, another of the leading broadband cities in Australia, was also part of the event, featuring none other than Beethoven, with his sublime trio for clarinet, cello and piano.

Gordon Smith of the University of New England’s (UNE) in Armidale enthusiastically reported on the event that took place in late September. Technically sponsored by the Centre for Networking Technologies for the Information Economy (CeNTIE) at CSIRO, it blew any cobwebs out of the UNE’s new AARNet/TransGrid/Country Energy broadband link, connecting Armidale to Sydney, and from there to the rest of the country.

It used three 30Mbit/s video streams coming from the Masterpiece Series performance at the Sydney Conservatorium of Music. A 30Mbit/s stream was fed back to the auditorium in Sydney from UNE. An audience at the Australian Resources Research Centre (ARRC) in Perth was similarly included. The event linked all three sites in a simultaneous multicast at studio quality using CeNTIE’s Digital Video over IP technology.

After the concert an interactive Q&A session was held between audiences and performers.

A mix of multicast and unicast was used to distribute the video streams around the country.

Images were projected onto screens by data projectors.

The concert clearly demonstrated the power of broadband. According to the Performance, Outreach and Communication branch of the Sydney Conservatorium, utilising this technology will add a new and exciting dimension to the making, and enjoyment, of music across Australia.

It proves that music-lovers will soon be able to enjoy, in their own homes, the two hundred-plus concerts the Conservatorium presents each year.

This new technology can make a huge contribution to music education in Australia. Music making and education becomes eminently accessible right across our large continent. In a broadbanded community everyone can gain access to music teachers, concert series, and international visiting artists.

All in all, a great way to demonstrate the capabilities of the network.

A return performance, sourced from the New England Conservatorium of Music, is planned for the coming months.

I had another, personal, connection to this event. Ex-Bucketty resident, Mark Walton, now Chair of Performance, Outreach and Communication, was in charge of the project from the Sydney Conservatorium end. He was very enthusiastic about the prospect of high art and high technology converging to offer opportunities for students and teachers alike. He had recently been involved in forging a similar 2-hour concert link with Beijing and is proud of the fact that the Sydney Conservatorium is a world leader in this development.

See also:
Australia – Broadband – Content
Australia – Local Broadbanding – Case Studies
Australia – Utilities Broadband Projects

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