cdma2000 1X-EV doubles the downlink capacity of IS-95 cdmaOne systems – to 2.4Mb/s – and supports both data and voice. The most widely deployed version of cdma2000 is 1X-EV-DO, meaning ‘1 channel, evolution, data only’. By optimising the system for packet data entirely, using a fixed 128 byte packet length whilst giving no consideration to circuit-switched voice, the performance of ‘always-on’ packet data services can be optimised.

According to Qualcomm it supports 3.1Mb/s and 1.8Mb/s on the downlink and uplink respectively and has increased support for low-latency applications.

EV-DO enables simultaneous VoIP and data traffic. It provides QoS and a genuine multicast facility in which a single transmission is received by multiple handsets in the same cell. The QoS facility is aimed at operators who want to offer tiered pricing arrangements, which enable users to select the priority various kinds of traffic will receive. The system is stated to be capable of automatically classifying packets and applying appropriate QoS arrangements to them.

Several telcos are launching EV-DO services to thwart competition from wireless broadband operators. However, from a commercial point of view it makes more sense to develop a strategy aimed at initially offering the service in the business market. It will start to replace some of the GPRS-based mobile data services used in the business market as a next generation development.

One of the most successful mobile data services in the business market has been Blackberry, the mobile e-mail service. Over the last couple of years operators have been able to sell this service to thousands of corporate organisation, in which it is now used by hundred of thousands of employees. Thanks to Blackberry, many operators have been able to rebalance its mobile data revenue in the business market. Traditionally 90% of this revenue came from SMS, This has now been reduced to 50% (including Premium SMS), with Blackberry taking the other half. Operators are now working hard to get Blackberry working over EV-DO by mid-2005.

The key to success in mobile data for the business market is to be able to seamlessly link this service Microsoft applications such as Outlook.

EV-DO is on the migration path to full-blown 3G systems – it is therefore sometimes also called 2¾G. So it is most likely that these mobile data services also will evolve towards 3G. The problem for users is that they will continuously have to upgrade their user device and, in the case of Blackberry, we are talking close to $1,000 per device. This was flagged as a major stumbling block by the delegates at my recent Roundtable on mobile data and mobile content.

As well as this, the earlier versions of such new devices are notoriously prone to bugs, and business users in particular are not keen to become involved in these early stage developments

With close to a dozen mobile data technologies now available to them, businesses are also very wary of being caught in a dead-end technology street.

Last but not least, mobile-based technologies are expensive and new wireless broadband technologies such as Wi-Max might offer them more capacity and better prices. So we have certainly not seen the end of the developments in this market.

Towards the end of the decade I expect to see a convergence between mobile data and wireless broadband, based on the unifying IP technology.

Paul Budde

Technology – Mobile – 2 – 2G – IS-95 CDMA & GSM

KDD going for the local loop
Very much like the rest of the world, in Japan also the incumbent NTT has had a comfortable ride over the last few years, easily holding onto its monopolistic position in the market. And the duopolist, KDD, has been content to tag along, hovering just below a 30% market share.

However, it now looks as though KDD is going to get a second chance, based on broadband and the combination of broadband with disruptive technologies such as VoIP.

KDD has installed IP equipment as well as DSLAMs throughout the NTT network, and it can use this as an independent infrastructure to develop a range of very competitive products. Not only is the company already successful in broadband, it will also add new fixed line offerings to its services. Of course, the prices of its new ‘Metal Plus’ service will be significantly lower than those of NTT. It will also abandon the one-off connection charge (Y70,000).

At last the company appears ready to attack the most important bastion of NTT’s monopoly, that of local loop services.

And there is no doubt in my mind that others are going to follow the KDD model, notably Optus in Australia.

Softbank goes for 1GB broadband
Softbank is Japan’s leading broadband competitor. This company took the broadband lead back in 2001 and changed the broadband and Internet scene in Japan forever. They currently have close to 13 million broadband subscribers. However, their services are not yet IP-based and they are therefore unable to come up with the same attractive price deals for fixed line call services as KDD.

However, their strategy is different. They are extending their reach through fibre optic, increasing the speed of broadband. While most countries are still talking about 2Mb/s services (and some countries, like Australia and New Zealand, even about 500Kb/s) in Japan and Korea a minimum of 25Mb/s is the rule rather than the exception.

But Softbank is going much further and will offer 1Gb/s services over its FTTH network. And all of this at a price below the current rate charged by NTT for a 100Mb/s service.

The company aims at 60 million broadband users by the end of 2005!

3G backbone network
KDD will also use its new infrastructure to build seamless connections with their 3G networks. This will allow them to use the 3G network, both as a backbone network for fixed calls and for LAN connections and new mobile data services, which in Japan are far more successful than anywhere else in the world (with the exception of Korea).

It is expected that NTT will respond with some panic-driven reactions. They have failed to properly prepare themselves for these massive changes and, as is the case with most other incumbents, their revenues – and, most importantly, their profits – still remain largely dependent on their monopolistic services. And it is these services that are now under threat.

Vodafone lagging behind
Vodafone has embarked on a daring new strategy that has left the company well behind in the 3G developments in Japan.

Traditionally, Japan’s mobile operators offer handsets as an integral part of their service and they tailor these devices to suit their proprietary services. They have been very successful at this. However, Vodafone is targetting the weak spot of this approach. These tailor-made handsets are, of course, more expensive and so Vodafone is aiming at globally standardised handsets, which would be far more cost-effective to produce and which, over time, would provide a competitive price advantage.

Handsets, however, have been a notorious trouble-spot in the mobile market for the last 15 years. They are always in short supply – a typical chicken and egg situation, with handset operators unwilling to produce large quantities without a commitment from the operators.

While KDD now has most of its mobile subscribers on its 3G network, and DoCoMo has at least 10%, less than 1% of Vodafone’s users have moved to 3G. They are currently losing subscribers to their rivals.

It will be very interesting to see if the company’s daring strategy pays off.

Paul Budde

See also:

Japan – Broadband – ADSL
Japan – Broadband – Cable, Wireless LAN, FTTH
Japan – Broadband – Market Overview
Japan – Broadcasting – Cable TV
Japan – Broadcasting – Satellite and Interactive TV
Japan – Broadcasting – Terrestrial TV
Japan – Data Market
Japan – E-Services
Japan – Fixed Network – IP Telephony
Japan – Fixed Network – Market Overview
Japan – Internet
Japan – Key Statistics and Telecommunications Market Overview
Japan – Major Telecommunications Players
Japan – Mobile Communications – 3G and 4G
Japan – Mobile Communications – Major Mobile Operators
Japan – Mobile Communications – Market Overview
Japan – Mobile Communications – Mobile Services
Japan – Regulatory Environment
Japan – Network Developments

Utility company PowerNet (Vic) was purchased by US-based GPU Inc in October 1997. In July 2001 the company was acquired by Singapore Power, which in turn is owned by Temasek Holdings (Singaporean Government).

In mid 2004 SPI PowerNet purchased the Victorian power distribution company TXU for approximately $5.2B, with some legally binding undertakings with the ACCC.

Exhibit 1 – Non-Regulated Business (Telecoms) activities
Dark Fibre Leasing
Managed Services
E1 to STN 1
Antenna Site Leasing
172 Sites
State Mobile Radio
Emergency Services

SPI PowerNet upgraded their Metropolitan Fibre ring from its PDH legacy system to a Synchronous Digital Hierarchy (SDH) network utilising Siemens equipment. SPI PowerNet has recently completed a Victoria wide fibre fibre optic network, connecting the regional cities of Geelong, Ballarat, Bendigo Shepparton, and Wodonga. In addition to the outer regional ring, SPI PowerNet has approximately 260km of metropolitan fibre optic network and an optical connection from the east of Melbourne to Churchill in the Latrobe Valley.

The company’s fibre Network Expansion plans for the future include:
Bendigo to Redcliffs
Geelong to Portland
Linking of the Victorian network to NSW

Singapore Powers recent acquisition of TXU may present other opportunities in the telecoms area as well:
Extension of fibre back bone
Increased customer access
Opportunities for PLC

Another growth area the company is exploring involved broadband. It is looking as wireless opportunities here as well. Furthermore the company expects that broadband will further increase demand for its backbone network.

See also:
Australia – BPL and PLC – Critical Assessments
Australia – Multi-Utilities Markets
Australia – Powerline Broadband and PLC – Developments
Australia – UtiliTel
Australia – Utilities – Major Players
Technology – Infrastructure – Last Mile 9 – Broadband over Power Lines (BPL)

Smart Wired House – HIA Economics Group survey findings

Research conducted by the HIA Economics Group in late 2004 (this research is conducted every two years, with research estimated to be completed again in May 2006) into attitudes towards smart wiring in new homes showed awareness and uptake of smart wiring was increasing, as more customers became aware of the possibilities for home automation and were demanding it.

Top-level findings from the survey included:

• Some 86% of respondents had heard about the Smart Wired House Project compared with 69% in 2001.
• The current level of smart wiring uptake based on each company’s reported starts for the year suggested that 11% of new homes had some form of smart wiring. The highest uptake was in New South Wales at 13.2%, followed by Victoria at 12.3%. Western Australia had an uptake of 10% while South Australia had an estimated 6% and Queensland 4.3%.
• A question regarding accreditation of electrical contractors showed high levels of accreditation in all states across either the Clipsal/HPM or Smart Wired training or both, with 97% of contractors accredited.
• When asked the question ‘Has your electrician given you the option for better data cabling?’ 84% of respondents said yes.
• When asked of the importance of data cabling to customers, 60% of customers rated it as at least important. Of these 27% were in the top quintile of importance, suggesting that nearly one third of customers saw it as an essential part of their new home. Only 11% of customers saw smart wiring as completely unimportant.
• The most sought-after features from data cabling, among those who thought data cabling was important to their customers, were telephone/Internet at 72%, followed by television distribution at 56%, security at 33%, audio at 29% and multiple data outlets at 26%.
• In 70% of respondents, the trigger for offering wiring packages would come from an increasing demand from customers. Lower price was the next trigger at 16% whereas in 15% of cases there would be nothing that could trigger the offering of packages as the demand was not there.

Broadband TV
One of the main reasons for the success of broadband was the competition that the telcos received from the cable TV companies.

The telcos were caught off guard.

More interested in protecting their vested interest in data communications, namely ISDN, they had no intention of quickly introducing DSL-based services, as these would cannibalise their lucrative data revenues.

So, for the first two or three years most countries in Europe and North America had more subscribers with cable TV-based than DSL-based broadband. It is only recently that the telcos have begun to catch up to, and overtake, broadband cable TV penetration.

But, having recovered from this back-foot position, the telcos are now striking back and are rapidly moving into broadband TV.

First movers
One of the leaders in this market is FastWeb, the very successful Italian broadband service in Milan. They are offering commercial TV services over their 4Mb/s DSL service. A minimum 6Mb/s service is considered preferable, but FastWeb has already achieved significant success with its 4Mb/s service.

While a variety of entertainment services are available, the killer application is live soccer matches. Other commercial services are available in Japan, where Softband/Broadmedia offers 14 TV stations and NTT has 18 TV stations over DSL. KDD’s TV over FTTH service will be launched in December and, in that same month, T-Online in Germany will launch a VOD service over its DSL network.

Others telcos who are not far behind include BT, Telefonica, Telenor, Chunghwa, Belgacom and TeliaSonera.

While Telstra in Australia will find it hard to compete with pay TV operator Foxtel, as they own half of the company, others are preparing for the next step. TransAct already offers TV services over its network and I am sure a few others will try to enter this market where Telstra can’t compete to obtain an advantage.

KPN moving into digital terrestrial TV
One of the problems that telcos are facing, however, is the quality of their telecoms network. This makes it difficult for them to offer a broadband TV service across their network. In some areas the network is up to scratch and a good service can be provided, but elsewhere that will not be the case.

While I was in the Netherlands last week, I was interested to see how the Dutch incumbent KPN addressed this issue.

They have secured access to digital terrestrial TV from Digitenne, one of the service providers in this field (KPN has a 40% stake in this company). It will use this network to deliver 25 channels of TV and 17 radio channels to compete head-on with the cable TV operators. In the Netherlands cable TV penetration is as high as 95% and now the telco wants to give them a run for their money.

They are also promoting their digital TV service as a wireless service, claiming people can take their decoder with them to their boat or caravan – something you, of course, can’t do with your cable subscription. Decoders are available from €39.95.

The big deal, obviously, is the bundling. The normal price for KPN’s digital TV service is €13,95. Combined with a mobile subscription this price drops to €10.9; add a fixed phone and ADSL subscription and the price drops even further to €7.95

Paul Budde

See also:
Global – Convergence – Broadband TV
Global – Convergence – Media Centres for the Digital Home
Global – Broadcasting – Analysis – Digital FTA market in 2004
Koninklijke PTT Nederland (KPN)