Archive for September, 2004

MOBILE COMMUNICATIONS IN THE MIDDLE EAST

Tuesday, September 28th, 2004

Mobile penetration in the region varies enormously from country to country. The variations can partly be explained by differences in wealth and economic development and market competition but not entirely. Government policy is also a major factor. In Lebanon the Government specifically limited the maximum number of subscribers of the operators of two BOT contracts who established services in the mid-1990s. These BOT contracts were terminated in June 2001 and since then disputes with the operators, failed attempts to sell licences and failure within the government to agree on policy have stalled the market.

Iran, Syria, Iraq and Yemen have dramatically low numbers of mobile subscribers. In the case of Yemen low economic development is the main cause but numbers are growing. Iraq had no mobile service before the second Gulf War in 2003. Three licences were awarded in late 2003 and all three operators have launched services. Subscriber numbers are now expected to grow quickly. Services in Iran have been limited by infrastructure capacity problems and again subscriber numbers could grow quickly once the Irancell consortium led by Turkcell, the winner of a recent licence tender, starts operations. There are no major market structure changes under-way in Syria but the introduction of prepaid services in late 2003 may lead to growth.

Change is on the way in the mobile markets of the Middle East, most of which have not been characterised by either a high degree of competition or privately owned operators. Oman and Saudi Arabia are currently engaged in selling a second GSM licence, a second licence was awarded by Iran to a consortium led by Turkcell in February 2004, three licences were awarded for Iraq in late 2003 and Bahrain awarded a second licence in April 2003. Jordan has begun proceedings to auction a third licence. Yemen is also planning to award a third licence but its low economic development would suggest it might not be highly sought after. Kuwait, Jordan and the Yemen have had two players in their mobile markets for some years. Israel has three major operators and one smaller operators. Turkey has three mobile operators.

Kuwait’s two mobile operators, Mobile Telecommunications Co (operating as MTC Vodafone – it has a partner agreement with Vodafone Group plc) and National Mobile Telecommunication Co (operating as Wataniya Telecom) have been winners of new licences in the region. Both were part of winning consortia for Iraq’s licences and MTC Vodafone was the major investor in the consortium that won the Bahrain second licence. In addition MTC Vodafone owns one of the Jordanian operators and been reported as winning one of the management contracts for Lebanon.

Whilst there has been some investment by operators from outside the region, it has not been extensive.

Etisalat of the UAE launched 3G services in December 2003, the first Middle Eastern operator to do so, branded Mubashir. Etisalat’s Universal Mobile Telecommunication System (UMTS) network was provided by Huawei Technologies with a US$16 million contract. The service was initially available only in major cities with the first phase, completed in March 2004, able to support up to 160,000 subscribers.

Operators in Israel are well advanced with preparations to launch 3G services. Both Partner Communications and Cellcom have awarded contracts to build 3G UMTS networks. PelePhone launched the first phase of a CDMA-1x network in June 2003, covering most of Israel’s urban areas. It also intends to launch 3G services in the second half of 2004, using Evolution Data Optimised (EVDO) technology.

MTC Vodafone Bahrain included EDGE services at its launch in December 2003.

The Middle East is a major market for satellite mobile services, particularly through UAE-based Thuraya Satellite Telecommunications Oil companies and other personnel working in remote areas make up many of the subscriber numbers but in the aftermath of the 2003 war Iraq has been the major market for satellite mobile. By July 2003, Thuraya had 45,000 subscribers in Iraq, out of its 154,000 subscribers worldwide, and Iraq accounted for 200,000 minutes per day of Thuraya’s daily usage total of 600,000. Iridium and Globalstar are also present in the region.

New report form BuddeComm: Mobile Communications in the Middle East – 2004
Counties covered: Afghanistan, Bahrain, Egypt Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria, Turkey United Arab Emirates, Yemen. Price US$250.

For more info see: Mobile Communications in the Middle East – 2004

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THE MOBILE PRICE WAR HAS STARTED

Tuesday, September 28th, 2004

Hutchison was the first to make a move in 2003, with a $99 per month, all-you-can-eat mobile phone charge. This was the beginning of the price war, but the other combatants were slow to move at first.

Vodafone was threatening to follow a similar course, but, following the loss of over 100,000 customers to Hutchison, they did not do so. However, better late than never, from now on they will increasingly introduce more new flat-price packages.

At the same time, Telstra launched a $99 package on its CDMA network, with calls worth up to $400. However, given their very expensive, $1/minute prepaid charges, customers still could quickly reach that limit.

Hutchison’s and Vodafone’s charges are much lower. By only offering the service to its CDMA customers, Telstra could experience a cannibalisation of its GSM service, with ultimately very little net effect on its customer base, and a potentially negative effect on its overall revenues.

Interestingly, Hutchison has begun to limit its all-you-can-eat package to $500 a month as well – and it only applies to national calls, which have to be of a 10-minute duration, or less.

Optus has not yet introduced a similar package; instead it has lowered its prepaid charges, and has also included a larger number of free calls options over its network.

Paul Budde

See also:
Australia – Mobile Communications – Industry Trends and Analysis 2004
Australia – Mobile Communications – Subscriber Statistics
Australia – Mobile Communications – Revenue Overview

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THE INFORMATION ‘HAVES’ AND ‘HAVE NOTS’ – SPTEMBER 2003

Tuesday, September 28th, 2004

The dramatic development of information and communication technologies (ICTs) has revolutionized the way people work, interact and conduct their daily lives. It has transformed the global economy and heralded a new and dynamic information society. However, it has also created a world of information ‘haves’ and ‘have nots’.

The World Summit on the Information Society (WSIS) has developed an Action Plan (www.itu.int/wsis/preparatory/prepcom/pc3/index.html) in order to harness the power of ICTs as a tool for development and to create an information society that benefits all of humanity. WSIS brings together Heads of State, Executive Heads of the United Nations agencies, non-governmental organizations, civil society entities, industry leaders and media representatives to foster a clear statement of political will and concrete plan of action to shape the future of the global information society and to promote the urgently needed access of all countries to information, knowledge and communication technologies for development.

Information society issues under discussion within the WSIS include: global cyber-security, Spam, universal and affordable access to ICTs, open source software, as well as ICT applications for e-health, e-learning, e-business, e-employment, e-environment and e-government.

Global targets for the action plan to be considered include:
All villages to be connected by 2010, with a community access point by 2015.
90% of the world’s population to be within wireless coverage by 2010 and 100% by 2015.
All universities to be connected by 2005, secondary schools by 2010 and primary schools by 2015.
All public libraries to be connected by 2006
All hospitals to be connected by 2005, and health centres by 2010.
All central governments departments to have a website and email address by 2005 and all local governments departments by 2010.
All of the world’s population to have access to domestic radio services by 2010 and domestic TV services by 2015.
The necessary technical conditions should be in place by 2010 to permit all world languages to be present and used on the Internet.

See also:
Global – Infrastructure – Regulatory – E-Economy Issues
Global – Regulatory – ITU, WTO (Archived in 2003)

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MARKET TRENDS AND DEVELOPMENTS IN NORTH AND SOUTH KOREA

Saturday, September 18th, 2004

South Korea has become one of the world’s major players in the telecommunications and IT market. The South Korean government has adopted a very progressive approach to deregulation, liberalisation and privatisation of the local telecom industry. The result has been willingness on the part of operators to invest in infrastructure and to be innovative, providing the basis for a booming telecommunications market.

Despite being opened up to competition in 1997, the fixed-line telephone market in South Korea continues to be dominated by the incumbent KT, formerly known as Korea Telecom.

South Korea is the third largest mobile market in Asia, topping the 35 million subscriber mark in March 2004. The market was reaching a point of saturation, with approximately 75% of the population carrying at least one mobile phone. With mobile TV broadcasting expected to be available by mid-2004, South Korea continues to push the boundaries of mobile communications. South Korea’s development as a leading mobile market has been boosted low tariffs and terminal costs, the introduction of competition in 1996, the nationwide roll out of Code Division Multiple Access (CDMA) technology and the arrival of camera-equipped mobile phones. Third Generation (3G) phones and advanced mobile services such as mobile gaming, m-banking and m-commerce have also kept the mobile market invigorated.

South Korea leads the world in the commercial application of broadband Internet technologies, with the highest number of broadband connections per capita. The country’s impressive broadband progress began in the late 1990s when the government issued a policy mandating that operators provide a 2Mb/s connection for every citizen. This broadband policy, combined with a competitive market and a densely populated and computer literate society, laid the foundations for Korea’s burgeoning broadband market.
Korea has become the most penetrated broadband market in the world, with over 80% of all homes with Internet accessing the network via a high-speed connection. See also: South Korea.

Telecommunications in North Korea is seriously impeded by a combination of its parlous economic state and government repression of communication. The number of fixed-lines and the volume of voice traffic in North Korea are minuscule compared with South Korea. Because of its mountainous landscape and the high cost of building fixed-line networks, a mobile telephone network is a much more viable option. Very limited mobile services began in late 2002. The country originally sought assistance from South Korea to set up this mobile service but was refused. It subsequently established a joint venture with a Thailand-based company in a special economic zone in north eastern North Korea. North Korea remains the only country in the world that had yet to adopt the Internet for public usage.

See also: North Korea.

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TELSTRA’S NEW PLANS FOR ITS AUSTRALIAN NETWORK

Tuesday, September 14th, 2004

Telstra goes IP and optic
Following Telstra’s recent decision to revert to its core business I expect them now to come back with a more detailed plan on how they intend to accomplish this.

I expect them to announce a very significant network upgrade, to be implemented over a number of years, which will slowly drive fibre closer to the home. There won’t be a comprehensive FttH announcement, since, with the right upgrade, the company could drive fibre to the neighbourhood, and from there to the curb, before it has to address the last-mile issue.

By doing this they will be able to increase the capacity on most of their current last-mile network to 50Mb. From there on, FttH will be fully deployed on a ‘needs’ basis. This whole process could take 10-15 years to implement, so a scaled plan is the way forward in this instance.

Broadband growth predictions
In respect of broadband growth, unlike most other research companies who have made predictions re broadband development in Australia, we have been consistent in our forecasts since 1999. Our prediction then was, and still is, that 25% broadband penetration amongst Internet households and 80% amongst SMEs using the Internet would occur within 18 months of Telstra’s becoming serious about this market. Telstra became serious earlier this year so we predict that there will be 2.5 million broadband users by 2006.

Our second prediction is that, about 18 months after they begin to use broadband, the first 25% of broadband users will require a minimum of 2Mb. Eighteen months later, 25% of the market will require 6/10Mb; and another 18 months will produce a demand for 10/25Mb. So this scenario should fit in well with the migration path that I expect Telstra to announce shortly.

Regulatory holiday?
I wouldn’t be surprised if the company were to argue for regulatory immunity. In other words, they might want to ask the ACCC to permit exclusive rights, obviating the need to unbundle the network for others to use. The reason I am a bit more cautious here is that, if they do ask for protection, it will basically be an admission that these networks are a natural monopoly, and that would create havoc with the government’s privatisation policy – because that would be an admission that infrastructure-based competition is not viable, at least not on a national scale.

But monopolies do require strict regulation, and there we are, back to the good old ‘structural separation’ issue. As I predicted at the time, the Minister resolutely gagged discussion on this topic; the issue will continue to haunt us until we address it. Unfortunately, both the Government and the Opposition have indicated that they are not willing to discuss the matter; however, it is a debate we must have and our politicians will be forced to face the issue again if Telstra argues for regulatory protection.

Integrated video, voice and data
The way I see Telstra progressing with its infrastructure improvement is that major initial upgrades are going to be done within the existing network, which will have to change from an electronic to an optical network. It will obviously be a completely nextgen, IP-based network – one that will allow for a full integration of voice, data and video.

This will drive network costs down by 50% and more.

This, in turn, will allow Telstra to begin to look at truly bundled products. Currently customers who buy a line rental subscription; a broadband subscription; a pay TV subscription and a mobile phone subscription, can get them bundled which will give them a 10% discount if they buy two or more of these services. Over a converged network it is possible to offer customers the option to add new services at an incremental cost of, let’s say, $5.

For example, a basic $25 package gives you always-on Internet, but for $30 you get always-on Internet plus all-you-can-eat voice, for another extra $5 high-speed, another extra $5 TV quality video, etc.

Almighty Telstra
This, of course, puts Telstra in an extremely powerful position in the market. I have no problems with that, as long that it is recognised that their network is a natural monopoly, and as long as appropriate regulatory industry measures are taken to allow full open competition on the network. I am cautiously optimistic about this, as I see it as part of their back-to-basics vision.

I understand that Telstra will no longer pursue the plan of becoming a media company that will then only make its own content available over the infrastructure, and/or will take advantage of that position to offer their own services in a preferential way, above others that want to use the network

This network misuse should be prohibited at all costs, and Telstra might have to retreat from some of the content deals they already have in place – while this is not a significant issue at this stage, it is the principle that is important.

We are talking about a new economic infrastructure that will be a very important utility for businesses as well as for individual users.

Paul Budde

Telstra Corporation Limited – Infrastructure Analysis – 2004
Australia – Infrastructure – Telstra’s Role
Australia – Telecommunications Infrastructure CAN and CBD Networks

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